99.
Adriano v Pangilinan
FACTS:
Adriano is the registered owner of a parcel of land. Sometime on 1990, petitioner entrusted the
original owner’s copy of the TCT to Salvador, a distant relative, for the purpose of securing a
mortgage loan. Thereafter without the knowledge and consent of Adriano, Salvador mortgaged
the property to Pangilinan. Subsequently when Adriano verified the status of his title with the
Register of Deeds of Marikina, he was surprised to discover that there was already annotation
for Real Estate Mortgage in the title, purportedly executed by one Adriano, in favor of
Pangilinan. Adriano then denied that he executed deed and repeatedly demanded Pangilinan to
return or reconvey to him his title to the said property and when these demands were ignored or
disregarded, he instituted the present suit.
Pangilinan, in his defense, claimed that petitioner voluntarily entrusted his title Salvador for the
purpose of securing a loan, thereby creating a principal-agent relationship between the plaintiff
and Salvador for the aforesaid purpose. Thus, according to respondent, the execution of the
REM was within the scope of the authority granted to Salvador; that in any event that since the
said TCT has remained with petitioner, the latter has no cause of action for reconveyance
against him.
The trial court ruled in favor of Adriano, but the CA reversed the said decision.
ISSUE:
Whether herein respondent was an “innocent mortgagee for value.
RULING:
After a careful review of the records and pleadings of the case, we hold that he is not, because
he failed to observe due diligence in the grant of the loan and in the execution of the real estate
mortgage.
It is quite clear from the testimony of respondent that he dismally failed to verify whether the
individual executing the mortgage was really the owner of the property.
The ocular inspection respondent conducted was primarily intended to appraise the value of the
property in order to determine how much loan he would grant. He did not verify whether the
mortgagor was really the owner of the property sought to be mortgaged. Because of this, he
must bear the consequences of his negligence.
We are not impressed by the claim of respondent that he exercised due diligence in
ascertaining the identity of the alleged mortgagor when he made an ocular inspection of the
mortgaged property. Respondent’s testimony negated this assertion.
Since he knew that the property was being leased, respondent should have made inquiries
about the rights of the actual possessors. He could have easily verified from the lessees
whether the claimed owner was, indeed, their lessor.
Petitioner’s act of entrusting and delivering his TCT and Residence Certificate to Salvador was
only for the purpose of helping him find a money lender. Not having executed a power of
attorney in her favor, he clearly did not authorize her to be his agent in procuring the mortgage.
He only asked her to look for possible money lenders. Article 1878 of the Civil Code provides:
“Art. 1878. Special powers of attorney are necessary in the following cases:
x xx – x xx – x xx
(7) To loan or borrow money, unless the latter act be urgent and indispensable for the
preservation of the things which are under administration;
x xx – x xx – x xx
(12) To create or convey real rights over immovable property;
x xx – x xx – x xx.”
As between petitioner and respondent, we hold that the failure of the latter to verify essential
facts was the immediate cause of his predicament. If he were an ordinary individual without any
expertise or experience in mortgages and real estate dealings, we would probably understand
his failure to verify essential facts. However, he has been in the mortgage business for seven
years. Thus, assuming that both parties were negligent, the Court opines that respondent
should bear the loss. His superior knowledge of the matter should have made him more
cautious before releasing the loan and accepting the identity of the mortgagor.
Given the particular circumstances of this case, we believe that the negligence of petitioner is
not enough to offset the fault of respondent himself in granting the loan. The former should not
be made to suffer for respondent’s failure to verify the identity of the mortgagor and the actual
status of the subject property before agreeing to the real estate mortgage. While we
commiserate with respondent — who in the end appears to have been the victim of scoundrels
— his own negligence was the primary, immediate and overriding reason that put him in his
present predicament.
To summarize, we hold that both law and equity favor petitioner. First, the relevant legal
provision, Article 2085 of the Civil Code, requires that the “mortgagor be the absolute owner of
the thing x xx mortgaged.” Here, the mortgagor was an impostor who executed the contract
without the knowledge and consent of the owner. Second, equity dictates that a loss brought
about by the concurrent negligence of two persons shall be borne by one who was in the
immediate, primary and overriding position to prevent it. Herein respondent – who, we repeat, is
engaged in the business of lending money secured by real estate mortgages – could have
easily avoided the loss by simply exercising due diligence in ascertaining the identity of the
impostor who claimed to be the owner of the property being mortgaged. Finally, equity merely
supplements, not supplants, the law. The former cannot contravene or take the place of the
latter.
