Philippine National Bank Binalbagan Branch v. Antonio Tad-Y

Summary

The Tad-y family obtained agricultural loans from PNB secured by real estate mortgage over six properties. When two properties became tax delinquent in 1988, PNB participated in the auction sale and acquired them for a minimal amount. After the Tad-ys fully paid their restructured loans in 1996, PNB refused to release these two properties, claiming ownership through the auction sale. The Supreme Court ruled that PNB acted as attorney-in-fact for the Tad-ys during the auction under the mortgage terms, so the acquisition inured to the Tad-ys' benefit. When the loans were fully paid, PNB should have returned all properties. PNB's refusal constituted constructive fraud, creating a constructive trust requiring reconveyance. The decision establishes important precedents on mortgagee duties, agency relationships in mortgage contracts, and constructive trusts arising from breach of fiduciary obligations.