PNB Vs Villa
PNB Vs Villa
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* THIRD DIVISION.
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PEREZ, J.:
For resolution of the Court is the instant Petition for
Review on Certiorari1 filed by petitioner Philippine
National Bank (PNB), seeking to reverse and set aside the
Decision2 dated 18 December 2013 and Resolution3 dated
13 June 2014 of the Court of Appeals (CA) in C.A.-G.R. CV
No. 97612. The assailed decision and resolution affirmed
the 22 June 2011 Decision4 of the Regional Trial Court
(RTC) of Villasis, Pangasinan, Branch 50 which found that
petitioner PNB is not a mortgagee in good faith.
The Facts
Petitioner PNB is a universal banking corporation duly
authorized by Bangko Sentral ng Pilipinas (BSP) to engage
in banking business.
Sometime in 1986, Spouses Reynaldo Cornista and
Erlinda Gamboa Cornista (Spouses Cornista) obtained a
loan from Traders Royal Bank (Traders Bank).5 To secure
the said obligation, the Spouses Cornista mortgaged to the
bank a parcel of land with an area of 451 square meters
designated as Lot 555-A-2 and registered under Transfer
Certificate of Title (TCT) No. 131498 in their names by the
Register of Deeds of Pangasinan.
For failure of the Spouses Cornista to make good of their
loan obligation after it has become due, Traders Bank
foreclosed the mortgage constituted on the security of the
loan.
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6 Rollo, p. 80.
7 Id., at p. 74.
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8 Id., at p. 59.
9 Id., at pp. 82-88.
10 Id., at pp. 89-95.
11 Id., at pp. 96-97.
12 Id., at p. 98.
13 Id., at p. 59.
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14 Id., at p. 80.
15 Id., at p. 99.
16 Id., at pp. 100-125.
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In a Resolution19 dated 13 June 2014, the RTC refused
to reconsider its earlier decision and thereby denied the
Motion for Reconsideration interposed by PNB.
On appeal, the CA Decision20 dated 18 December 2013
affirmed the RTC ruling. In failing to exercise greater care
and diligence in approving the loan of the Spouses Cornista
without first ascertaining if there were any defects in their
title, the appellate court held that PNB could not be
afforded the status of a mortgagee in good faith. It went
further by declaring that [a] bank whose business is
impressed with public interest is expected to exercise more
care and prudence in its dealings than a private individual,
even in cases involving registered lands. A bank cannot
assume that, simply because the title offered as security is
on its face free of any encumbrances of lien, it is relieved of
the responsibility of taking further steps to verify the title
and inspect the properties to be mortgaged.21 The CA thus
disposed:
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I.
WHETHER OR NOT PNB IS A MORTGAGEE IN GOOD FAITH;
II
WHETHER OR NOT PNB IS LIABLE FOR DAMAGES.24
The Court’s Ruling
We resolve to deny the petition.
In general, the issue of whether a mortgagee is in good
faith cannot be entertained in a Rule 45 petition. This is
because the ascertainment of good faith or the lack thereof,
and the determination of negligence are factual matters
which lay outside the scope of a petition for review on
certiorari. Good faith, or the lack of it, is a question of
intention. In ascertaining intention, courts are necessarily
controlled by the evidence as to the conduct and outward
facts by which alone the inward motive may, with safety,
be determined.25 A recognized, exception to the rule is
when there are conflicting findings of fact by the CA and
the RTC.26 In the case at bar, RTC and the CA agreed on
their findings.
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Clearly, the PNB failed to observe the exacting
standards required of banking institutions which are
behooved by stat-
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27 Rollo, p. 46.
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We never fail to stress the remarkable significance of a
banking institution to commercial transactions, in
particular, and to the country’s economy in general.30 The
banking system is an indispensable institution in the
modern world and plays a vital role in the economic life of
every civilized nation.31 Whether as mere passive entities
for the safekeeping and saving of money or as active
instruments of business and commerce, banks have become
an ubiquitous presence among the people, who have come
to regard them with respect and
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32 Id.
33 Id.
34 Id., at pp. 822-823; p. 728.
35 Id., at p. 823; pp. 728-729.
36 Id.
37 Id.
38 Id.
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39 Id.
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