Cristeta Bautista v. Mangaldan Rural Bank

Summary

Property owners sued rural bank after it negligently consolidated and sold their entire property when only half was mortgaged. Cristeta Bautista had mortgaged her conjugal half-share for P2,000 in 1975, but after foreclosure, the bank erroneously consolidated the whole property and sold it to Rodriguez for P3,385. The Supreme Court found the bank grossly negligent and acting in bad faith, awarding moral and exemplary damages. The Court emphasized banks' duty of care given their vital role in society and the serious consequences of their negligence on innocent property owners. Rodriguez was also found not to be an innocent purchaser for value as he failed to examine the title annotations showing only half was mortgaged.