ROBERT SAN PEDRO v. WILLY ONG, GR No.

177598, 2008-10-16
Facts:
On 3 April 1996,... San Pedro purchased from the spouses Guillermo Narciso and Brigida
Santiago (spouses Narciso) two parcels of land... with areas of... about 200 square meters
and 150 square meters, respectively. San Pedro bought the subject properties for
P35,000.00, as evidenced by Deeds of Sale
In order to transfer in his name the TCTs covering the subject properties, and upon the
spouses Narciso's recommendation, San Pedro hired the services of Adora Dela Peña
(Dela Peña) who is known to be very familiar with the intricacies of real property transfers.
San Pedro inquired with the Registry of Deeds of Bulacan as to the status of his application
for the issuance in his name of new TCTs for the subject properties. He was surprised to
find out, however, that the subject properties were still registered in the names... of the
Narciso spouses and were mortgaged to Willy Ong
According to the annotation stamped at the back... spouses Narciso, on 23 July 1998,
executed Special Powers of Attorney (SPAs) authorizing Dela Peña to mortgage the subject
properties to Ong. The SPAs were procured by Dela Peña from the... spouses Narciso with
the help of one Rufino Landayan, a tricycle driver who accompanied Dela Peña to the
spouses Narciso's residence. San Pedro found out that it was Normita Caballes (Caballes),
Ong's agent, who caused the registration of the mortgages with the Registry of Deeds... of
Bulacan and the annotation thereof
San Pedro filed with the RTC on 7 May 1999 a Petition for Nullification of Mortgage with
Damages against the spouses Narciso, Dela Peña, Landayan, Ong, and Caballes...
spouses Narciso admitted to selling the subject properties to San Pedro, and denied
authorizing the mortgage of the same to Ong. Their signatures on the SPAs were
fraudulently secured by Dela Peña who misrepresented to them that such... document was
necessary to facilitate the transfer of the TCTs of the subject properties to San Pedro. The
spouses Narciso denied that they participated in or benefited from the loan obligation
obtained by Dela Peña from Ong.
Caballes and Ong raised in their Joint Answer[10] the defense of mortgagee-in-good-faith.
They claimed that they both relied in good faith on the SPAs granting Dela Peña the
authority to mortgage the subject properties since there was... nothing on the face thereof
which would have raised their suspicion as to the authenticity of the document. Ong alleged
that the subject properties were used by Dela Peña as collateral for the loan, amounting to
P170,000.00, which she obtained from Ong. Since the said loan... obligation already
became due and demandable, Ong sought the foreclosure of the subject properties. During
the auction sale, Ong emerged as the highest bidder but the TCTs of the subject properties
were not yet transferred to his name.
a document examiner and handwriting expert from the National Bureau of Investigation
(NBI) was also presented as a witness for San Pedro. He confirmed that the signature of
Guillermo Narciso on one of the SPAs was forged, while the signatures of his wife Brigida
Santiago on both SPAs were spurious.
Ong admitted that he was not able to personally talk to Dela Peña or to the spouses
Narciso. All... negotiations pertaining to the loan and mortgages were transacted through
Caballes.
Dela Peña was armed with the SPAs from the spouses Narciso authorizing her to...
mortgage the subject properties. After Caballes examined the documents, she proceeded to
the Registry of Deeds of Bulacan to verify the status and ownership of the subject
properties. After she found out that the TCTs were in the name of the spouses Narciso and
were clean,... Caballes went to Ong who released the money for the loan. Dela Peña issued
nine post-dated checks to Ong as payment for her loan obligation. All nine checks were
dishonored by the drawee bank when presented for payment because Dela Peña's account
was already closed. Ong, thus,... instituted before the Municipal Trial Court (MTC) of
Balagtas, Bulacan, a case against Dela Peña for violation of Batas Pambansa Blg. 22.
RTC rendered a Decision in Civil Case No. 515-M-99, declaring null and void the mortgages
constituted over the subject properties in Ong's favor. According to the court a quo, Ong
and Caballes failed to exercise reasonable degree of diligence... before they entered into
mortgage contracts with Dela Peña, who was not the registered owner of the properties
being mortgaged and was only purportedly authorized by the registered owners thereof.
Ong and Caballes appealed the adverse RTC Decision to the Court of Appeals, assigning
as error the lack of jurisdiction of the RTC over the person of Dela Peña
Court of Appeals granted the appeal of Ong and Caballes, and accordingly reversed the
RTC Decision... appellate court justified its reversal of the ruling of the RTC on its finding
that... the service of summons on Dela Peña was invalid; thus, the RTC did not acquire
jurisdiction over her person.
substituted service of summons employed by the Sheriff was ineffective for failure to comply
with the statutory requirements before such mode of service could be... resorted to. The
Sheriff in the present case used substituted service without even showing that Dela Peña
could not be served personally with the summons within reasonable time. Since Dela Peña
was an indispensable party to the controversy, without her no final determination of... the
case can be had.
Issues:
WHETHER OR NOT DE LA PEÑA IS AN INDISPENSABLE PARTY TO THE CASE.
Ruling:
Contrary to the pronouncement of the Court of Appeals, Dela Peña was not an
indispensable party to this case, without whom, no final conclusion of the case can be
arrived at.
Evidently, Dela Peña does not fall within the definition of an indispensable party. As the
Court has explained, Civil Case No. 515-M-99 is an action for quieting of title, intended to
remove any cloud upon San Pedro's title to the subject properties. The real estate
mortgages in... favor of Ong annotated on the TCTs of the subject properties constitute the
cloud to be removed.
the crux of the controversy is the title of San Pedro to the subject properties vis-à-vis that of
Ong, for the determination of which, Dela Peña's participation is not an... absolute
necessity. The judgment of the RTC upholding San Pedro's title to the subject properties
over Ong's, or even if it were the other way around, would not have affected Dela Peña,
because Dela Peña never claimed title to the subject properties; she only misrepresented
that... she had authority to mortgage the same on behalf of the registered owners, namely,
the spouses Narciso.
After she successfully, albeit, fraudulently, obtained the loan using the subject properties as
mortgage, her interest in the same had ended. She may have perpetrated fraud... for which
she may be held liable but, clearly, these may be established in a separate and subsequent
case. Her presence in the proceedings before the RTC would have only permitted complete
relief since the said court could have already determined therein her liability for the...
damages she had caused to any of the parties, but it does not make her presence
indispensable.
San Pedro's title proved to be superior to that of Ong's. The subject properties were sold to
him prior to the mortgage of the same to Ong.
An expert witness affirmed that the signature of Guillermo Narciso on one of the purported
SPAs in favor of Dela Peña was forged, while the signatures of his wife Brigida Santiago on
both SPAs were spurious. Ong and Caballes cannot even... point out any defect in San
Pedro's title to the subject properties. Ong can only assert better right to the same as
allegedly a mortgagee in good faith.
the well-entrenched legal principle in our jurisprudence requires a higher degree of diligence
to be exercised by the mortgagee when he is not directly dealing with the registered owner
of real property.
The Court has stressed time and again that every person dealing with an agent is put upon
inquiry, and must discover upon his peril the authority of the agent, and this is especially
true where the act of the agent is of unusual nature. If a person makes no inquiry, he is...
chargeable with knowledge of the agent's authority, and his ignorance of that authority will
not be any excuse.
Ong's averment that he exercised prudence in the loan-mortgage transaction is debunked
by his own admission that he merely relied on Caballes' representations thereon, without
personally meeting or speaking with Dela Peña, the supposed agent, or... the spouses
Narciso, the registered owners of the subject properties. Although he instructed Caballes to
check the TCTs of the subject properties, he did not bother to personally meet Dela Peña
and ascertain the genuineness and authenticity of the latter's authority to mortgage
The real estate mortgages constituted on the subject properties based on false and
fraudulent SPAs are void ab initio... forged powers of attorney are without force and effect
and,... thus, nullified the mortgage constituted on the strength thereof
Since Ong cannot be deemed a mortgagee-in-good-faith nor an innocent purchaser for
value of the subject properties at the auction sale thereof, his claim to the said... properties
cannot prevail over that of San Pedro. The Court's ruling, however, is without prejudice to
the right of Ong to proceed against those who perpetrated the fraud to his prejudice.
Petition is GRANTED