SOCORRO COSTA CRISOSTOMO vs. COURT OF APPEALSG.R. Nos.

91383-84 May 31, 1991

Facts:

Socorro Costa Crisostomo was the registered owner of a residentialhouse and lot, located in
Mandaluyong and covered by a TCT. She hasoccupied the property ever since she had her house built
and hasintroduced other improvements thereon. Sometime in 1978, Norma SanJose offered to buy the
land including the house thereon for P300,000.00.Crisostomo and San Jose agreed that this amount
would be paid from theproceeds of a loan that San Jose would obtain from a bank using
petitionerCrisostomo's title as collateral. As payment, San Jose issued three (3) postdated Far East Bank
and Trust Company checks with a total amount ofP300,000.00. On San Jose’s request, another deed of
sale was executedover the same property, which was then registered, such that Crisostomo’sTCT was
cancelled and a new TCT was issued.Because of unfulfilled promises to make the postdated checks
“good”,Crisostomo demanded San Jose to return the title. However, the latterinformed that the title
was in the possession of Diana J. Torres, themortgagee. San Jose never returned the said title as she had
promised nordid she ever make any payment to the petitioner. Thus, Crisostomo made awritten
demand to Diana J. Torres to reconvey the subject property to her.This demand was not satisfied.
Crisostomo was thus compelled to file aCivil Case against San Jose but this was later amended to include
Torres.The RTC of Pasig decided in favour of Crisostomo and ordered for the re-conveyance of the title
and ordered San Jose and Torres to jointly andseverally pay Crisostomo P100,000 as moral damages,
P20,000 attorney’sfees and costs. On Torres’ appeal to the CA, the CA affirmed the RTC’sdecision with
modifications that the Deed of Real Estate Mortgage in favorof Torres is to be noted on the Certificate of
Title which will be re-issued toCrisostomo and excluded Torres from indemnifying Crisostomo.
Crisostomofiled a motion for partial reconsideration of the appellate court's decision butwas denied.

Issue: Whether Torres is a mortgagee in good faith

Held:

No. The Supreme Court held that a careful study of the recordsshows that the Court of Appeals erred in
finding that private respondentDiana Torres is a mortgagee in good faith on the basis of evidence.There
are strong indications that Atty. Flor Martinez, the lawyer of Diana J.Torres, the mortgagee, knew of the
defect of San Jose's title. When Atty.Martinez personally inspected the property with San Jose for her
clientTorres, she allowed herself to be introduced to Socorro Crisostomo who wasthen actually
occupying the house, as a Bank Inspector of the DevelopmentBank of Meycauayan, Bulacan from whom
the loan was being obtained,obviously to convince Crisostomo that the procedure is in accordance
withher agreement with San Jose.