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Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 183774 November 14, 2012
PHILIPPINE BN!ING CORPORTION, Petitioner,
vs.
RTURO "#, BERNR"O "#, $OSE "ELG"O N" CIPRIN "ELG"O,
Respondents.
D E C I S I O N
PERLS%BERNBE, J.:
his Petition for Revie! on Certiorari assails the "anuar# $%, &%%' Decision
(
of the Court
of )ppeals *C)+ in C),-.R. CV No. .(/0&, !hich set aside the October ., (112
Decision
&
of the Re3ional rial Court of Cebu Cit#, 4ranch && *RC+ and directed the
Re3ister of Deeds of Cebu Cit# to cancel ransfer Certificate of itle *C+ Nos.
.(0/'
$
and .(1%(
2
in the na5es of respondents )rturo D# and 4ernardo D# *D#s+ and to
issue the correspondin3 Cs in the na5e of respondent Cipriana Del3ado *Cipriana+.
he 6actual )ntecedents
Cipriana !as the re3istered o!ner of a .',(&1,s7uare 5eter *s7.5.+ lot, deno5inated as
8ot No. /1//, situated in 4arrio on39il, Min3lanilla, Cebu, covered b# C No. ('./'.
She and her husband, respondent "ose Del3ado *"ose+, entered into an a3ree5ent !ith a
certain Cecilia an *bu#er+ for the sale of the said propert# for a consideration of
P(%.%%:s7.5. It !as a3reed that the bu#er shall 5a9e partial pa#5ents fro5 ti5e to ti5e
and pa# the balance !hen Cipriana and "ose *Sps. Del3ado+ are read# to e;ecute the deed
of sale and transfer the title to her.
)t the ti5e of sale, the bu#er !as alread# occup#in3 a portion of the propert# !here she
operates a noodle *bihon+ factor# !hile the rest !as occupied b# tenants !hich Sps.
Del3ado undertoo9 to clear prior to full pa#5ent. )fter pa#in3 the total su5 of
P(20,%%%.%% and bein3 then read# to pa# the balance, the bu#er de5anded the e;ecution
of the deed, !hich !as refused. Eventuall#, the bu#er learned of the sale of the propert#
to the D#s and its subse7uent 5ort3a3e to petitioner Philippine 4an9in3 Corporation
*Philban9+, pro5ptin3 the filin3 of the Co5plaint
.
for annul5ent of certificate of title,
specific perfor5ance and:or reconve#ance !ith da5a3es a3ainst Sps. Del3ado, the D#s
and Philban9.
In their )ns!er, Sps. Del3ado, !hile ad5ittin3 receipt of the partial pa#5ents 5ade b#
the bu#er, clai5ed that there !as no perfected sale because the latter !as not !illin3 to
pa# their as9in3 price of P(0.%%:s7.5. he# also interposed a cross,clai5 a3ainst the D#s
averrin3 that the deeds of absolute sale in their favor dated "une &', (1'&
/
and "une $%,
(1'&
0
coverin3 8ot No. /1// and the ad<oinin3 8ot No. 2(%%,) *on !hich Sps. Del3ado=s
house stands+, !ere fictitious and 5erel# intended to enable the5 *the D#s+ to use the
said properties as collateral for their loan application !ith Philban9 and thereafter, pa#
the true consideration of P(0.%%:s7.5. for 8ot No. /1//. >o!ever, after receivin3 the
loan proceeds, the D#s rene3ed on their a3ree5ent, pro5ptin3 Sps. Del3ado to cause the
annotation of an adverse clai5 on the D#s= titles and to infor5 Philban9 of the si5ulation
of the sale. Sps. Del3ado, thus, pra#ed for the dis5issal of the co5plaint, !ith a
counterclai5 for da5a3es and a cross,clai5 a3ainst the D#s for the pa#5ent of the
balance of the purchase price plus da5a3es.
6or their part, the D#s denied 9no!led3e of the alle3ed transaction bet!een cross,
clai5ants Sps. Del3ado and bu#er. he# clai5ed to have validl# ac7uired the sub<ect
propert# fro5 Sps. Del3ado and paid the full consideration therefor as the latter even
!ithdre! their adverse clai5 and never de5anded for the pa#5ent of an# unpaid
balance.
On the other hand, Philban9 filed its )ns!er
'
assertin3 that it is an innocent 5ort3a3ee
for value !ithout notice of the defect in the title of the D#s. It filed a cross,clai5 a3ainst
Sps. Del3ado and the D#s for all the da5a3es that 5a# be ad<ud3ed a3ainst it in the event
the# are declared seller and purchaser in bad faith, respectivel#.
In ans!er to the cross,clai5, Sps. Del3ado insisted that Philban9 !as not a 5ort3a3ee in
3ood faith for havin3 3ranted the loan and accepted the 5ort3a3e despite 9no!led3e of
the si5ulation of the sale to the D#s and for failure to verif# the nature of the bu#er?s
ph#sical possession of a portion of 8ot No. /1//. he# thereb# pra#ed for the
cancellation of the 5ort3a3e in Philban9=s favor.
Subse7uentl#, Sps. Del3ado a5ended their cross,clai5 a3ainst the D#s to include a
pra#er for the nullification of the deeds of absolute sale in the latter=s favor and the
correspondin3 certificates of title, and for the conse7uent reinstate5ent of Cipriana?s
title.
1
he co5plaints a3ainst the D#s and Philban9 !ere subse7uentl# !ithdra!n. On the other
hand, both the bu#er and Sps. Del3ado never presented an# evidence in support of their
respective clai5s. >ence, the RC li5ited itself to the resolution of the clai5s of Sps.
Del3ado, Philban9 and the D#s a3ainst one another.
he RC Rulin3
In the Decision
(%
dated October ., (112, the RC dis5issed the cross,clai5s of Sps.
Del3ado a3ainst the D#s and Philban9. It noted that other than Sps. Del3ado=s bare
alle3ation of the D#s= supposed non,pa#5ent of the full consideration for 8ot Nos. /1//
and 2(%%,), the# failed to adduce co5petent evidence to support their clai5. On the
other hand, the D#s presented a cash voucher
((
dated )pril /, (1'$ dul# si3ned b# Sps.
Del3ado ac9no!led3in3 receipt of the total consideration for the t!o lots.
he RC also observed that Sps. Del3ado notified Philban9 of the purported si5ulation
of the sale to the D#s onl# after the e;ecution of the loan and 5ort3a3e docu5ents and
the release of the loan proceeds to the latter, ne3atin3 their clai5 of bad faith. Moreover,
the# subse7uentl# notified the ban9 of the D#s= full pa#5ent for the t!o lots 5ort3a3ed
to it.
he C) Rulin3
>o!ever, on appeal, the C) set aside
(&
the RC=s decision and ordered the cancellation of
the D#s= certificates of title and the reinstate5ent of Cipriana=s title. It ruled that there
!ere no perfected contracts of sale bet!een Sps. Del3ado and the D#s in vie! of the
latter=s ad5ission that the deeds of sale !ere purposel# e;ecuted to facilitate the latter=s
loan application !ith Philban9 and that the prices indicated therein !ere not the true
consideration. 4ein3 5erel# si5ulated, the contracts of sale !ere, thus, null and void,
renderin3 the subse7uent 5ort3a3e of the lots li9e!ise void.
he C) also declared Philban9 not to be a 5ort3a3ee in 3ood faith for its failure to
ascertain ho! the D#s ac7uired the properties and to e;ercise 3reater care !hen it
conducted an ocular inspection thereof. It thereb# canceled the 5ort3a3e over the t!o
lots.
he Petition
In the present petition, Philban9 insists that it is a 5ort3a3ee in 3ood faith. It further
contends that Sps. Del3ado are estopped fro5 den#in3 the validit# of the 5ort3a3e
constituted over the t!o lots since the# participated in inducin3 Philban9 to 3rant a loan
to the D#s.
On the other hand, Sps. Del3ado 5aintain that Philban9 !as not an innocent 5ort3a3ee
for value for failure to e;ercise due dili3ence in transactin3 !ith the D#s and 5a# not
invo9e the e7uitable doctrine of estoppel to conceal its o!n lac9 of dili3ence.
6or his part, )rturo D# filed a Petition,in,Intervention
($
ar3uin3 that !hile the deeds of
absolute sale over the t!o properties !ere ad5ittedl# si5ulated, the si5ulation !as onl#
a relative one involvin3 a false state5ent of the price. >ence, the parties are still bound
b# their true a3ree5ent. he sa5e !as opposed:ob<ected to b# both Philban9
(2
and Sps.
Del3ado
(.
as i5proper, considerin3 that the C) <ud35ent had lon3 beco5e final and
e;ecutor# as to the D#s !ho neither 5oved for reconsideration nor appealed the C)
Decision.
he Rulin3 of the Court
he petition is 5eritorious.
)t the outset, the Court ta9es note of the fact that the C) Decision nullif#in3 the
7uestioned contracts of sale bet!een Sps. Del3ado and the D#s had beco5e final and
e;ecutor#. )ccordin3l#, the Petition,in,Intervention filed b# )rturo D#, !hich see9s to
5aintain the sub<ect contracts= validit#, can no lon3er be entertained. he cancellation of
the D#s= certificates of title over the disputed properties and the issuance of ne! Cs in
favor of Cipriana 5ust therefore be upheld.
>o!ever, Philban9=s 5ort3a3e ri3hts over the sub<ect properties shall be 5aintained.
@hile it is settled that a si5ulated deed of sale is null and void and therefore, does not
conve# an# ri3ht that could ripen into a valid title,
(/
it has been e7uall# ruled that, for
reasons of public polic#,
(0
the subse7uent nullification of title to a propert# is not a
3round to annul the contractual ri3ht !hich 5a# have been derived b# a purchaser,
5ort3a3ee or other transferee !ho acted in 3ood faith.
('
he ascertain5ent of 3ood faith or lac9 of it, and the deter5ination of !hether due
dili3ence and prudence !ere e;ercised or not, are 7uestions of fact
(1
!hich are 3enerall#
i5proper in a petition for revie! on certiorari under Rule 2. of the Rules of Court
*Rules+ !here onl# 7uestions of la! 5a# be raised. ) reco3niAed e;ception to the rule is
!hen there are conflictin3 findin3s of fact b# the C) and the RC,
&%
as in this case.
Pri5aril#, it bears notin3 that the doctrine of B5ort3a3ee in 3ood faithB is based on the
rule that all persons dealin3 !ith propert# covered b# a orrens Certificate of itle are not
re7uired to 3o be#ond !hat appears on the face of the title. his is in deference to the
public interest in upholdin3 the indefeasibilit# of a certificate of title as evidence of
la!ful o!nership of the land or of an# encu5brance thereon.
&(
In the case of ban9s and
other financial institutions, ho!ever, 3reater care and due dili3ence are re7uired since
the# are i5bued !ith public interest, failin3 !hich renders the 5ort3a3ees in bad faith.
hus, before approvin3 a loan application, it is a standard operatin3 practice for these
institutions to conduct an ocular inspection of the propert# offered for 5ort3a3e and to
verif# the 3enuineness of the title to deter5ine the real o!ner*s+ thereof.
&&
he apparent
purpose of an ocular inspection is to protect the Btrue o!nerB of the propert# as !ell as
innocent third parties !ith a ri3ht, interest or clai5 thereon fro5 a usurper !ho 5a# have
ac7uired a fraudulent certificate of title thereto.
&$
In this case, !hile Philban9 failed to e;ercise 3reater care in conductin3 the ocular
inspection of the properties offered for 5ort3a3e,
&2
its o5ission did not pre<udice an#
innocent third parties. In particular, the bu#er did not pursue her cause and abandoned her
clai5 on the propert#. On the other hand, Sps. Del3ado !ere parties to the si5ulated sale
in favor of the D#s !hich !as intended to 5islead Philban9 into 3rantin3 the loan
application. hus, no a5ount of dili3ence in the conduct of the ocular inspection could
have led to the discover# of the co5plicit# bet!een the ostensible 5ort3a3ors *the D#s+
and the true o!ners *Sps. Del3ado+.1wphi1 In fine, Philban9 can hardl# be dee5ed
ne3li3ent under the pre5ises since the ulti5ate cause of the 5ort3a3ors= *the D#s=+
defective title !as the si5ulated sale to !hich Sps. Del3ado !ere privies.
Indeed, a findin3 of ne3li3ence 5ust al!a#s be conte;tualiAed in line !ith the attendant
circu5stances of a particular case. )s aptl# held in Philippine National 4an9 v. >eirs of
Estanislao Militar,
&.
Bthe dili3ence !ith !hich the la! re7uires the individual or a
corporation at all ti5es to 3overn a particular conduct varies !ith the nature of the
situation in !hich one is placed, and the i5portance of the act !hich is to be
perfor5ed.B
&/
hus, !ithout di5inishin3 the ti5e,honored principle that nothin3 short of
e;traordinar# dili3ence is re7uired of ban9s !hose business is i5pressed !ith public
interest, Philban9=s inconse7uential oversi3ht should not and cannot serve as a bastion for
fraud and deceit.
o be sure, fraud co5prises Ban#thin3 calculated to deceive, includin3 all acts, o5issions,
and conceal5ent involvin3 a breach of le3al dut# or e7uitable dut#, trust, or confidence
<ustl# reposed, resultin3 in da5a3e to another, or b# !hich an undue and unconscientious
advanta3e is ta9en of another.B
&0
In this li3ht, the D#s= and Sps. Del3ado=s deliberate
si5ulation of the sale intended to obtain loan proceeds fro5 and to pre<udice Philban9
clearl# constitutes fraudulent conduct. )s such, Sps. Del3ado cannot no! be allo!ed to
den# the validit# of the 5ort3a3e e;ecuted b# the D#s in favor of Philban9 as to hold
other!ise !ould effectivel# sanction their blatant bad faith to Philban9=s detri5ent.
)ccordin3l#, in the interest of public polic#, fair dealin3, 3ood faith and <ustice, the Court
accords Philban9 the ri3hts of a 5ort3a3ee in 3ood faith !hose lien to the securities
posted 5ust be respected and protected. In this re3ard, Philban9 is entitled to have its
5ort3a3e carried over or annotated on the titles of Cipriana Del3ado over the said
properties.
@>ER6ORE, the assailed "anuar# $%, &%%' Decision of the Court of )ppeals in C),
-.R. CV No. .(/0& is hereb# )66IRMED !ith MODI6IC)ION upholdin3 the
5ort3a3e ri3hts of petitioner Philippine 4an9in3 Corporation over the sub<ect properties.
SO ORDERED.

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