Philippine Supreme Court Jurisprudence > Year 2020 > June 2020 Decisions > G.R. No. 214939 - BPI FAMILY SAVINGS BANK, INC., PETITIONER, vs. SPOUSES JACINTO SERVO SORIANO AND ROSITA FERNANDEZ SORIANO AS REPRESENTED BY THEIR ATTORNEY-IN-FACT, GLORIA SORIANO CRUZ, RESPONDENTS.:

This is a Petition for Review on Certiorari assailing the January 28, 2014 Decision¹ and September 17, 2014 Resolution² of the Court of Appeals (CA) in CA-G.R. CV No. 100039, which modified the decision of the Regional Trial Court (RTC) of Baguio City in a case for annulment of sale and reconveyance of certificate of title.

The facts, as summarized by the appellate court, are as follows:

Jacinto Servo Soriano and Rosita Fernandez Soriano (the spouses Soriano) owned two parcels of land in Chapis Village, Baguio City.³ One parcel is one thousand four hundred and ninety-two square meters in area with a fair market value of Six Hundred Twenty-Six Thousand Six Hundred Forty Pesos (P626,640.00) and covered by TCT No. 85840 (previously TCT No. T-14467); while the other parcel is one thousand twenty one square meters, more or less, with a fair market value of Four Hundred Twenty-Eight Thousand Eight Hundred Twenty Pesos (P428,820.00); and covered by TCT No. 87113 (previously TCT No. T-14466).⁴

On April 21, 2004, Rey Viado (Viado) caused the execution of an Affidavit of Loss purportedly by the spouses Soriano, forged their signatures and caused the annotation of the said Affidavit on TCT Nos. T-14466 and T-14467.⁵ Still using forged signatures of the spouses Soriano, Viado then caused the execution of a Special Power of Attorney, paving the way for the filing of a petition seeking a re-issuance of Owner's Duplicate Copies of Transfer Certificates of Title Nos. T-14466 and T-14467 before the Baguio City RTC, which granted the petition.⁶ The Baguio City RTC declared the Owner's Duplicate Copies of TCT Nos. T-14466 and T-14467 to be legally lost and of no force and effect and ordered the Register of Deeds of Baguio City to issue new titles in lieu of the lost ones.⁷

Essentially, Viado, together with several other persons, used the re�issued TCTs to secure loans from one Maria Luzviminda Patimo (Patimo) and petitioner BPI Family Bank (BPI Family). A more detailed account of the events is presented in the RTC Decision as follows: ChanRoblesVirtualawlibrary

In Civil Case No. 6210-R, plaintiffs alleged in their Amended Complaint that defendant Jessica Jose in confabulation with Viado executed a deed of conveyance entitled 'Acknowledgment of Trust', making it appear that the plaintiffs executed the same and that the land covered by TCT No. T-14467 was acquired by the plaintiffs through the funds of Jose and the same way was only held in trust by them in favor of Jose as the legal owner. On March 22, 2005, TCT No. T-14467 was transferred and registered in the name of Jose under TCT No. T-85840 of the Register of Deeds in Baguio City. On March 31, 2005, Jose filed a petition with the Register of Deeds cancelling the liabilities imposed by Section 4, Rule 74 of the Rules of Court. On January 11, 2006, Attorney-in-fact, Gloria Cruz went to pay the realty taxes of TCT No. T-14467, but to her surprise she was informed that the said property has been transferred to Jose, now covered by TCT No. T-85840. At the time of the filing of the original complaint on January 24, 2006, there was no annotation on TCT No. T-85840 involving the mortgage lien in favor of Maria Luzviminda Patimo, which was annotated only on March 21, 2006, and the Sheriffs Certificate of Sale was annotated only on September 11, 2006. Hence, plaintiffs filed an amended complaint impleading Maria Luzviminda Patimo as additional defendant in Civil Case No. 6210-R. In this case, plaintiffs prayed that the abovementioned Acknowledgment of Trust be declared void and that the Court order the reconveyance of TCT No. T-85840 in the name of plaintiffs and award damages, attorney's fees and costs of litigation.

In Civil Case No. 6211-R, plaintiffs asserted that on July 20, 2005, defendant Vanessa P. Hufana secured a loan with defendant BPI Family Savings Bank, Inc. in the amount of Two Million Pesos. BPI through the negligence of its loan officer, failed to make a thorough background investigation of the person of its client, Hufana and the documents used by the latter as collateral to the loan extended by the bank, and further allowed the use of a forged deed of conveyance resulting to the fraudulent registration of TCT No. 87113 in the name of its client, Hufana. This is especially made obvious by the fact that a forged Special Power of Attorney was used in the Deed of Absolute Sale to convey the said property to Hufana after the issuance of a reconstituted title through a series of calculated fraudulent acts perpetuated by Viado and Hufana without so much ascertaining to the truth with respect to the identity of the persons of the immediate transferors of the property subject of loan with mortgage. On July 21, 2006, through a forged Deed of Absolute Sale. TCT No. T-14466 was conveyed to Hufana. On January 2006, Attorney-in-Fact Gloria Cruz went to pay the realty taxes of TCT No. T-14466 but to her surprise she was informed that the taxes of the said property has been duly paid and that the said property was transferred to Hufana and is now under TCT No. 87113. Gloria Cruz immediately went to verify the records at the Register of Deeds of Baguio City and upon confirming the fraudulent transfer; she hired the services of counsel and caused the annotation of an Adverse Claim dated January 13, 2006 on TCT No. 87113 and filed the instant case to vindicate and protect plaintiffs rights.

Defendant Viado filed his Answer in the above-entitled cases. In both cases he admits the fact relating to the filing of the Petition for the Issuance of new owner's copies of TCT No. T-14466 and 14467, but denies having caused the execution of a special power of attorney for and in behalf of the owners. He asserted that it was Marilou Soriano who handed to him a prepared petition with annexes thereon for him to sign and thereafter for her retained counsel to file in court. This arrangement was explained by Marilou Soriano and Viado has agreed only when Marilou Soriano presented to him plaintiff Jacinto Soriano, then on a wheel chair, whom she introduced as his father. Likewise Viado agreed to help in reconstituting the missing titles for a fee of P80,000.00. Viado claims that he was just named in the Special Power of Attorney which was already notarized and attached to the Petition, x x x.

After summons by publication, defendants Jose in Civil Case No. 6210-R and Hufana in Civil Case No. 6211-R failed to file their respective answers. Upon motion by plaintiffs, Jose and Hufana were declared in default on January 21, 2008.

In its Answer in Civil Case No. 6211-R, duly filed on time, BPI admits paragraphs 1 and 8 of the Complaint and denies the rest of the material allegations in the Complaint. Paragraph 7, pertains to the plaintiffs assertion that the Petition for the issuance of new owner's duplicate copy of TCT Nos. T-14466 and T-14467 has been granted and that an Order was issued declaring that the owner's copy of the foregoing titles have been lost and no force and effect. Paragraph 8 refers to the asseveration that Hufana secured a loan of TCT No. 14466 with BPI in the amount of Two Million Pesos. By way of affirmative defenses. BPI slates that it has dealt with Hufana in full good faith, and as such, it is a mortgagee in good faith entitled to the protection under the law. Further, it states that it is not required to go beyond the four comers of Hufana's title, which on its face shows no defect. The loan documents are notarized documents which, under the law, are entitled to strong presumption of regularity and validity.

x x x x

Upon motion of plaintiffs duly granted by the court, an Amended Complaint was filed by the plaintiffs impleading Maria Luzviminda Patimo as defendant in Civil Case No. 6210-R.

In its Answer to the Amended Complaint, defendant Patimo denies the material allegations in the Amended Complaint. As Special and Affirmative Defenses, Patimo alleged that as early as September 2005, she was approached by defendant Jose who asked for a loan and offered as collateral TCT No. 85840. Before entering the said loan application of Jose, Patimo went to verify and check the above-stated title with the Register of Deeds of Baguio City. Satisfied that there no encumbrance or other liens on the title offered by Jose, Patimo granted the loan applied for by Jose in the amount of One Million Peso. The said loan was secured by a real estate mortgage over the TCT No. 85840.⁸

After due proceedings, the Branch 60 of the Baguio City RTC rendered a Decision on July 19, 2011,⁹ which disposed of the case as follows: ChanRoblesVirtualawlibrary

WHEREFORE, all premises duly considered, the court renders judgment as follows:

In Civil Case No. 6210-R, the case is hereby dismissed as to defendant Patimo for lack of merit. As of defendants Jose and Viado, they are hereby ordered to solidarity pay the plaintiffs the amount of one million pesos as and by way of actual damages; three hundred thousand pesos by way of moral damages; two hundred thousand pesos as and by way of exemplary damages; and twenty five [sic] thousand pesos as attorney's fees and to pay the cost of the suit.

In Civil Case No. 6211-R, the court hereby dismisses the case as to defendant BPI Family Bank for lack of merit. Defendants Viado and Hufana are hereby ordered to solidarity pay the plaintiffs the amount of two million pesos as and by way of actual damages; three hundred thousand pesos by way of moral damages; two hundred thousand pesos as exemplary damages; twenty five [sic] thousand pesos as attorney's fees and to pay the cost of the suit. In addition, both Civil Case No. 6210-R and 6211-R, defendants Jose, Viado and Hufana are ordered to solidarity pay the plaintiffs the amount of Php164, 911.69, as by way of actual damages.

SO ORDERED.¹⁰

The RTC found that the signatures of the spouses Soriano in the Special Power of Attorney� and Affidavit of Loss used by� Viado� in obtaining reconstitution of TCT Nos. T-14466 and T-14467, as well as those in the Acknowledgment of Trust and in the Deed of Absolute Sale used by Viado and Hufana in causing the transfer of TCT Nos. T-14466 and T-14467 and the issuance of new TCTs in their names were all forgeries.¹¹ Consequently, the RTC held that such subsequent TCTs, including the one presented by Hufana to BPI Family, are null and void as well. Nevertheless, the RTC held that Patimo and BPI Family dealt with the fraudulently acquired properties in good faith.¹²

The spouses Soriano moved for reconsideration of the RTC Decision insofar as it dismissed the cases against Patimo and BPI Family, which the trial court denied in an Order dated April 20, 2012. The spouses Soriano appealed to the CA.

Resolving the question of whether Patimo and BPI Family were mortgagees in good faith, the CA partially reversed the RTC Decision and reinstated the spouses Soriano's copy of TCT No. T-14466. The appellate court disposed thus: ChanRoblesVirtualawlibrary

WHEREFORE, in view of the foregoing premises, the appeal filed in this case by plaintiffs-appellants Spouses Jacinto Servo Soriano and Rosita Fernandez Soriano, as represented by their attorney-in-fact, Gloria Soriano Cruz, is hereby PARTIALLY GRANTED by modifying the July 19, 2011 Decision of the Regional Trial Court, Branch 60, Baguio City in Civil Case No. 6211-R as to defendant-appellee BPI Family Savings Bank in that the Transfer Certificate of Title No. T-87113 of the Registry of Deeds for the City of Baguio and Mortgage Loan Agreement with BPI Family Savings Bank dated July 25, 2005 are hereby declared null and void. The Register of Deeds in Baguio City is hereby DIRECTED to cancel all liens and encumbrances annotated on the original copy of TCT No. T-14466 and REINSTATE the Owner's Duplicate Copy of TCT No. T-14466. Likewise, the defendant-appellee BPI Family Savings Bank is hereby ordered to solidarily pay to the plaintiffs-appellants in accordance with the July 19, 2011 Decision of the Regional Trial Court. The Decision of the Regional Trial Court, Branch 60, in Baguio City, in Civil Cases Nos. 6210-R and 6211-R as to other defendants-appellees are hereby AFFIRMED.

SO ORDERED.¹³

The appellate court, on one hand, found Patimo a mortgagee in good faith as she exercised the proper diligence required of her as an experienced financier. Moreover, she verified the TCT presented to her with the Baguio City Register of Deeds and conducted an ocular inspection of the land covered thereby. On the other hand, BPI Family was not considered a mortgagee in good faith because it failed to exercise the proper diligence expected from a banking institution, on the basis of the following findings: ChanRoblesVirtualawlibrary

x x x Notably, when [Hufana] applied for a loan with BPI [Family], she presented TCT No. 14466 which was then under the name of the plaintiffs-appellants. Since the person applying for the loan is other than the registered owner of the real property being mortgaged, BPI should have already raised a red flag and which should have induced it to make inquiries into and confirm Hufana's' authority to mortgage the said x x x purported property [of hers]. However, instead of conducting further investigation, [BPI Family] simply required Hufana to transfer the title to the latter's name to avail of the loan. A person who deliberately ignores a significant fact that could create suspicion in an otherwise reasonable person is not an innocent purchaser for value. Indeed, [BPI Family] should not have simply relied on the face of the documents submitted by Hufana, as its undertaking to lend a considerable amount of money required of it a greater degree of diligence. x x x

x x x x

[BPI Family] asserted that, when Hufana secured the loan application, she presented TCT No. T-14466. The bank admitted that it did not inquire anymore as to the status of the subject lot because, according to [BPI Family], it is the responsibility of the borrower to verify the same. Accordingly, the loan of defendant-appellee was approved on July 18, 2005 and the proceeds thereof were released to Hufana on July 28, 2005, purportedly after the latter had already presented TCT No. T-87113, which was already under Hufana's name.

Verily, it is worthy to note that TCT No. T-87113 was issued only on July 25, 2005, while the loan application of Hufana and the Mortgage Agreement were executed on July 20, 2005. Notably, prior to the approval of the loan and the execution of the Mortgage Agreement between [BPI Family] and Hufana, TCT No. T-87113 was not yet in existence. It appeared that the loan was completely processed while the collateral was still in the name of the plaintiffs-appellants.¹⁴

BPI Family filed a motion for reconsideration, which the appellate court denied via the assailed resolution. Hence, this petition which claims that the CA erred in: 1) reversing the RTC's finding that BPI Family is a mortgagee in good faith; 2) holding BPI Family solidarity liable for damages to the spouses Soriano; and 3) affirming the RTC's award of moral and exemplary damages.

The petition is partly meritorious. While the CA correctly held that BPI Family was not a mortgagee in good faith, it erred in holding BPI Family solidarily liable for actual damages.�
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BPI Family not a mortgagee in good faith

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The question of whether BPI Family is a mortgagee in good faith is a question of fact¹⁵ which generally cannot be considered in a Rule 45 petition.¹⁶ One of the exceptions to this rule, however, applies to the case at bar, as the rulings of the courts a quo on the issue were conflicting.¹⁷

BPI Family argues that its conduct in approving Hufana's loan measured up to the diligence required of it by law and jurisprudence. According to the bank, it required the transfer of the title in Hufana's name as a pre-condition to the approval of the loan. As this pre-condition had been met by Hufana, BPI Family argues, it need no longer inquire into whether the previous owners had authorized the loan, as the bank can now rely upon the face of the TCT, which declares Hufana to be the owner.¹⁸ The jurisprudence requiring banks and financial institutions dealing with real property investigate the circumstances of the lots they are dealing with is inapplicable to the case at bar as the lot mortgaged by Hufana was vacant and not in the possession of third persons. Finally, BPI Family asserts that CA erred in giving great significance to the fact that the spouses Soriano's names were still on the TCT when Hufana presented it to the bank, as Hufana was taking out a loan in her own name for the purposes of buying said lot from the spouses Soriano. It was therefore, natural and regular, according to BPI Family, that the TCT and other documents of ownership still indicated the spouses Soriano as owners of the property.

The primary function of the Torrens system of land registration is essentially the establishment of a means by which land ownership may be incontrovertibly proven, with the anticipated effect of facilitating the ease, reliability, and enforceability of real estate transactions. Consequently, it has been held that "every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond the certificate to determine the condition of the property."¹⁹ The rule applies to both buyers and mortgagees of real property.²⁰ A further refinement of the rule with respect to mortgages is stated in Ruiz v. Dimailig:²¹

Such doctrine of mortgagee in good faith presupposes "that the mortgagor, who is not the rightful owner of the property, has already succeeded in obtaining a Torrens title over the property in his name and that, after obtaining the said title, he succeeds in mortgaging the property to another who relies on what appears on the said title." In short, the doctrine of mortgagee in good faith assumes that the title to the subject property had already been transferred or registered in the name of the impostor who thereafter transacts with a mortgagee who acted in good faith.²²

However, banks and financial institutions are charged with the observance of elevated standards of diligence in dealing with real properties in the course of their business; and are consequently expected to go beyond the statements in the Torrens title. The rule and its rationale are stated in Arguelles, et al. v. Malarayat Rural Bank, Inc.,²³ thus: ChanRoblesVirtualawlibrary

Moreover, in a long line of cases, we have consistently enjoined banks to exert a higher degree of diligence, care, and prudence than individuals in handling real estate transactions.

In Cruz v. Bancom Finance Corporation, we declared: ChanRoblesVirtualawlibrary

Respondent, however, is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private individuals, it is expected to exercise greater care and prudence in its dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations.

In Ursal v. Court of Appeals, we held that where the mortgagee is a bank, it cannot rely merely on the certificate of title offered by the mortgagor in ascertaining the status of mortgaged properties. Since its business is impressed with public interest, the mortgagee-bank is duty-bound to be more cautious even in dealing with registered lands. Indeed, the rule that person dealing with registered lands can rely solely on the certificate of title does not apply to banks. Thus, before approving a loan application, it is a standard operating practice for these institutions to conduct an ocular inspection of the property offered for mortgage and to verify the genuineness of the title to determine the real owners thereof. The apparent purpose of an ocular inspection is to protect the "true owner" of the property as well as innocent third parties with a right, interest or claim thereon from a usurper who may have acquired a fraudulent certificate of title thereto.

In Metropolitan Bank and Trust Co. v. Cabilzo, we explained the socio-economic role of banks and the reason for bestowing public interest on the banking system: ChanRoblesVirtualawlibrary

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. The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of every civilized nation. Whether as mere passive entities for the safekeeping and saving of money or as active instruments of business mid commerce, banks have become an ubiquitous presence among the people, who have come to regard them with respect and even gratitude and, most of all, confidence.²⁴

Crucially, the case at bar involves a situation where a party fraudulently obtained a reconstituted TCT by falsifying affidavits of loss and powers of attorney without the knowledge and consent of the original owners. In Ere�a v. Querrer-Kauffman,²⁵ this Court held: ChanRoblesVirtualawlibrary

Indeed, case law is that a Torrens title is generally conclusive evidence of ownership of the land referred to therein. While it serves as evidence of an indefeasible title to the property in favor of the person whose name appears therein x x x, when the instrument presented for registration is forged, even if accompanied by the owner's duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the assignee or the mortgagee, for that matter, acquire any right or title to the property. In such a case, the transferee or the mortgagee, based on a forged instrument, is not even a purchaser or a mortgagee for value protected by law.²⁶

With the foregoing legal principles in mind, the Court recapitulates the material facts leading up to the submission by Hufana of TCT No. 87113 to BPI Family as a pre-condition for the approval of her loan. TCT No. 87113 was issued in Hufana's name after she presented a forged Deed of Absolute Sale in favor of Viado, by virtue of which Viado conveyed the fraudulently reconstituted copy of TCT No. T-14466 to Hufana. As found by the trial court, this was discovered by the spouses Soriano's attorney-in-fact Gloria Cruz (Cruz) when she went to pay the realty taxes of TCT No. T-14466, but was surprised to learn that the tax on said property has been duly paid and that the lot had been transferred to Hufana under TCT No. 87113. Cruz immediately went to verify the records at the Register of Deeds of Baguio City; and upon confirming the fraudulent transfer, she hired the services of counsel and caused the annotation of an Adverse Claim dated January 13, 2006 on TCT No. 87113, and filed the instant case to vindicate and protect her principals' rights.²⁷

It is therefore clear that Hufana acquired title to the land covered by TCT No. T-14466 through the affidavit of loss, special power of attorney, and Deed of Sale, all of which were forged by Viado and his associates. Her title having been acquired through forged instruments, Hufana acquired no right to the property in question; and the spouses Soriano never lost their title to the land.²⁸

BPI Family could have discovered all these circumstances had it simply contacted the spouses Soriano or their attorney-in-fact Cruz, which it never did. The fact that Hufana initially presented the fraudulently reconstituted copy of TCT No. T-14466 which was still in the name of the spouses when she first approached BPI Family should have alerted the bank to at least contact the spouses. Given the heightened standard of diligence imposed upon it by law, BPI Family should not have presumed, as it admits to presuming, that "it was natural and regular that the TCT and other documents of ownership still indicated the spouses Soriano as owners of the property", just because "Hufana was taking out a loan in her own name for the purposes of buying said lot from the spouses Soriano". At the very least, they should have contacted the spouses Soriano and confirmed if Hufana was really buying the land from them. Given the foregoing circumstances, the CA's finding must be sustained: BPI Family was not a mortgagee in good faith.²⁹

Award of damages

The CA held BPI Family solidarity liable with Viado and Hufana for the following amounts: PhP2,000,000.00 in actual damages, PhP300,000.00 in moral damages, PhP200,000.00 in exemplary damages, PhP25,000.00 in attorney's fees, and an additional PhP164,911.69 in actual damages.

BPI Family argues that the CA erred in holding it solidarily liable for actual damages, there being no basis for such, as the spouses Soriano were able to recover title to their land. As regards moral and exemplary damages, BPI Family insists that it is not liable therefor because there was no proof of either the compensable suffering borne by the Soriano spouses or of BPI Family's bad faith or fraudulent intent in contracting with Hufana.

In awarding actual damages to the spouses Soriano, the trial� court explained: ChanRoblesVirtualawlibrary

Being the authors of the forgeries, defendants Jose, Viado, and Hufana must bear the brunt of the damages caused to the plaintiffs. Considering that the properties subject matter of these cases may no longer be reconveyed to the plaintiffs, they must be indemnified with the value thereof. In Civil Case No. 6210-R. as alleged in the Complaint, the fair market value of TCT No. 14467, from which TCT No. T-85840 was derived, is Php626,640.00. However, the undeniable facts would show that defendant Jose was able to obtain a loan in the amount of One (1) Million using TCT No T-85840 as collateral. At the foreclosure sale of the aforementioned property, the same property was sold to defendant Palimo in the amount of One Million pesos. The court surmises that had the plaintiffs themselves sold the property, it could have fetched a much higher value. Sadly, no evidence was presented to establish a much higher valuation of the property. Absent any evidence on record showing a higher valuation of the subject property, the Court has no recourse but to limit the actual damages in the amount of One Million Pesos, the amount by which defendants unduly profited from mortgaging the property and by which amount the property was sold at the foreclosure sale. The said amount of damages shall be borne solidarity by defendants Viado and Jose.

In Civil Case No. 6211-R, the fair market value of the property covered by TCT No. T-14466 from which TCT No. T-87113 was derived is 428, 820.00. As earlier discussed, the plaintiffs failed to present evidence showing a higher valuation of the property covered by TCT No. T-87113. However the record shows that defendant Hufana was able to obtain a loan in the amount of 2 Million Pesos using TCT No. 87113 as collateral. As in Civil Case no. 6210-11, the Court has no recourse but to limit the amount of actual damages to be awarded to the plaintiffs in the amount of 2 Million Pesos, which must be solidarity borne by defendants Viado and Hufana. Additionally, Plaintiffs were able to establish that they actually spent the amount of Php164,911.69. (Exhibits "J" and series) as actual expenses in the prosecution of these two cases for which they must be indemnified solidarity by defendants Viado, Jose and Hufana. x x x³⁰

Notably, the CA did not explain its reasons for holding BPI Family solidarily liable with Viado, Jose, and Hufana.

Actual damages are "compensation for an injury that will put the injured party in the position where it was before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of measurement."³¹ Stated differently, actual damages are compensation for sustained pecuniary loss. Thus, they may only be awarded when the pecuniary loss suffered by the claiming party was duly proven.³² In the case at bar, the trial court held that the spouses Soriano cannot recover the properties in dispute. Hence, the award of actual damages was grounded on the loss inflicted upon the spouses Soriano by the non-recovery of their real properties. Consequently, the amount awarded was based on the pecuniary benefit that the defendants were able to derive from the land. However, the CA, as affirmed by this Court, reversed the RTC and ruled that the spouses Soriano are entitled to recover the properties. Verily, there is no longer any legal basis for the award of actual damages to the spouses Soriano, as they will no longer suffer the loss or injury supposed to be compensated thereby. Nevertheless, only BPI Family can benefit from this finding, as the other defendants did not appeal the RTC Decision and are not parties to this petition.

As regards moral and exemplary damages, it has been held that damages of such nature may be recovered even if a bank's negligence may not have been attended with malice or bad faith.³³ Here, it was established that BPI Family was negligent in failing to fully ascertain the ownership status of the lot mortgaged to it. However, the record is bereft of any proof of BPI Family's malice or bad faith; or that it participated in the fraud perpetrated by Viado, Jose, and Hufana. As such, the CA did not err in holding BPI Family liable for moral damages, exemplary damages and attorney's fees. However, following Our ruling in Cavite Development Bank v. Spouses Lim,³⁴ the amounts awarded by the CA must be reduced. Accordingly, BPI Family must pay the spouses Soriano PhP50,000.00 as moral damages, PhP30,000.00 as exemplary damages, and PhP20,000.00 as attorney's fees, with interest at the legal rate of six percent (6%) per annum, in accordance with prevailing jurisprudence.³⁵

IN VIEW OF THE FOREGOING PREMISES, the present petition is hereby PARTIALLY GRANTED. The January 28, 2014 Decision in CA-G.R. CV No. 100039 is hereby MODIFIED to read as follows: ChanRoblesVirtualawlibrary

WHEREFORE, in view of the foregoing premises, the appeal filed in this case by plaintiffs-appellants Spouses Jacinto Servo Soriano and Rosita Fernandez Soriano, as represented by their attorney-in-fact, Gloria Soriano Cruz, is hereby PARTIALLY GRANTED by modifying the July 19, 2011 Decision of the Regional Trial Court, Branch 60, Baguio City in Civil Case No. 6211-R as to defendant-appellee BPI Family Savings Bank in that the Transfer Certificate of Title No. T-87113 of the Registry of Deeds for the City of Baguio and Mortgage Loan Agreement with BPI Family Savings Bank dated July 25, 2005 are hereby declared null and void. The Register of Deeds in Baguio City is hereby DIRECTED to cancel all liens and encumbrances annotated on the original copy of TCT No. T-14466 and REINSTATE the Owner's Duplicate Copy of TCT No. T-14466. Defendant-appellee BPI Family Savings Bank is hereby ordered to pay the plaintiffs-appellants PhP50,000.00 as moral damages, PhP30,000.00 as exemplary damages, and PhP20,000.00 as attorney's fees. The Decision of the Regional Trial Court, Branch 60, in Baguio City, in Civil Cases Nos. 6210-R and 6211-R as to other defendants-appellees are hereby AFFIRMED.

Interest at the legal rate of six percent (6%) per annum shall also be imposed on the total judgment award computed from the finality of this decision until its actual payment.

SO ORDERED.

Leonen, (Chairperson), Gesmundo, Carandang, and Zalameda, JJ., concur.chanRoblesvirtualLawlibrary

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NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 8, 2020 a Decision, copy attached hereto, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on October 21, 2020 at 1:50 p.m.
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Very truly yours, (SGD) MISAEL DOMINGO C. BATTUNG III Division Clerk of Court

Endnotes:

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¹ Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Rebecca de Guia-Salvador and Michael P. Elbinias. Rollo, pp. 32-46.

² Id. at 48-49.

³ Id. 33.

⁴ Id.

⁵ Id. at 33-34.

⁶ Id.

⁷ Id.

⁸ Id. at 51-53.

⁹ Penned by Judge Edilberto T. Claravall. Id. at 50-64.

¹⁰ Id. at 64.

¹¹ Id. at 60.

¹² Id.

¹³ Id. at 45.

¹⁴ Id. at 42-43.

¹⁵Land Bank of the Philippines v. Poblete, 704 Phil. 610, 621 (2013).

¹⁶Philippine National Bank v. Gregorio, 818 Phil. 321 (2017); Cabang, et al. v. Spouses Basay, 601 Phil. 167 (2009).

¹⁷Gatan, el al. v. Vinarao, G.R. No. 205912, October 18, 2017, 842 SCRA 602, 611; Pascual v. Burgos, et al., 776 Phil. 167, 182 (2016).

¹⁸ Petition, pp. 8-9. Rollo, pp. 15-16.

¹⁹Locsin v. Hizon, 743 Phil. 420 (2014).

²⁰Philippine National Bank v. Spouses Angel and Buenvenida Anay and Spouses Francisco and Dolores Lee, G.R. No. 197831, July 9, 2018.

²¹ 799 Phil. 273 (2016).

²² Id. at 282. Underlining in the original.

²³ 730 Phil. 226 (2014).

²⁴ Id. at 236-238.

²⁵ 525 Phil. 381 (2006).

²⁶ Id. at 399-400. Citations omitted.

²⁷Rollo, pp. 4-5.

²⁸ Id. at 3-4.

²⁹ Id. at 17, 42.

³⁰ Id. at 63.

³¹International Container Terminal Services, Inc. v. Chua, 730 Phil. 475, 489 (2014).

³²Michael Guy v. Raffy Tulfo, Allen Macasaet, Nicolas V. Quijano, Jr., Janet Bay, Jesus P. Galang, Randy Hagos, Jeany Lacorte and Venus Tandoc, G.R. No. 213023, April 10, 2019.

³³Cavite Development Bank v. Spouses Lim, 381 Phil. 355, 371-372 (2000), citing Tan v. Court of Appeals, 309 Phil. 295 (1994).

³⁴ Id. at 361.

³⁵Lara's Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc., G.R. No. 225433, August 28, 2019; Nacar v. Gallery Frames, 716 Phil. 267 (2013).chanRoblesvirtualLawlibrary