Bank of Commerce vs San Pablo

Facts:

Natividad owned a lot. It was registered

under her name and covered by TCT. Santos is
a very good friend of Sps. San Pablo.

To accommodate a loan from Direct

Funders Management by Santos, they executed
an SPA authorizing Santos to obtain a loan and
use as security said property.

When the loan was settled, Sps. San

Pablo demanded from Santos the return of the
title. Santos refused.

Upon inquiry with the ROD, as to the

status of the TCT of the subject property, they
were surprised when they discovered that the
property was again used by Santos as collateral
for another loan obligation from the Bank of
Commerce. Eventually, the bank foreclosed the
property.

Sps. San Pablo filed a complaint

seeking for the Quieting of Title and alleging that
the SPA was forged.

Issue:

Whether or not an action for Quieting of

Title will prosper.

Ruling:

YES. All the requisites applying Article

476 is present in the case at bar.

Requisites:

1. The plaintiff must have legal or

equitable title.
Legal title- evidenced by TCT.

2. There must be a cloud on title or

interest of the reason of PRICE.
Encumbrance- mortgage.

3. The PRICE is apparently valid on its

face. It was issued by the ROD.

4. The PRICE is invalid/voidable. It

was forged.
5. The PRICE may be prejudicial to
said title.

The mortgage of the subject

property to the Bank of Commerce,
annotated on the Sps. San Pablo’s TCT,
constitutes a cloud on their title to the
subject property, which may, at first,
appear valid and effective, but is
allegedly invalid or voidable for having
been made without their knowledge and
authority as registered owners.