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, in consideration of P60,000.00. 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 or not consent is an issue in determining who must bear the loss if a mortgage
contract is sought to be declared a nullity.

RULING: The court ruled in favor of the petitioner, setting aside the decision of the CA, and
reinstating the Ruling of the RTC. The court ruled that the mortgage is null and void, for
being entered into by a person who is not the absolute owner of the thing. The court also
found that the petitioner is a not a purchaser for value, that his negligence is the proximate
cause to the property being registered REM. According to the court the respondent is a
businessman and that while it is true that when dealing with Torrens title one may rely on the
face of the title, the court held that the negligence of the respondent to ascertain the identity
of the imposter is critical that it is due to this mistake that the property is now encumbered by
a REM. The court in granting that the respondent is negligent finds that if there was any
negligence eon the party of Salvador, then such is inconsequential. The court therefore ruled
in favor of the petitioner due to the negligence of the respondent.