Tio V Abayata
TIO V ABAYATA
FACTS: This is an action for annulment of mortgage, mortgage sale, a subsequent sale and certificates of title, filed by the successors-in-interest of Celedonio Abayata. It was respondents' contention that they are the absolute owners of the property in dispute, a 1,868-square meter parcel of land located in Lapu-Lapu City, Cebu, by virtue of a final Decision dated November 26, 1986, rendered by the RTC of Lapu-lapu City. Respondents alleged that through machinations, defendant Benjamin Lasola (Lasola) was able to register the property in his name under TCT No. 11428 and mortgage it to secure a loan from the Commercial Rural Bank of Tabogon (Cebu), Inc. (Rural Bank). In turn, the Rural Bank foreclosed the mortgage and sold the property to petitioners who registered the property under TCT No. 20006.
Petitioners, on the other hand, contended that they bought the property in 1989 from the Rural Bank. That the Certificate of Sale and the Definite Deed of Sale, including the Real Estate Mortgage between Lasola and the Rural Bank, were inscribed on Lasola's title. That the petitioners even went beyond the Rural Bank's documents and together with a Rural Bank representative, inspected the property. When confronted with the presence of houses on the property, they were led to believe by the Rural Bank's representative that the occupants were merely squatters whose occupation was being tolerated by the Rural Bank. ISSUE: WON the rural bank exercised due diligence as expected of a banking institution
HELD: The Rural Bank is a mortgagee in bad faith. Records confirm that the Rural Bank did not exercise the due diligence required of banking and financial institutions before entering into the mortgage contract withLasola. As aptly found by the RTC: [D]efendant Rural Bank was not a mortgagee in good faith because of its failure to examine more closely the title of the mortgagors despite the first-hand knowledge that other persons, and not the would-be
FACTS: This is an action for annulment of mortgage, mortgage sale, a subsequent sale and certificates of title, filed by the successors-in-interest of Celedonio Abayata. It was respondents' contention that they are the absolute owners of the property in dispute, a 1,868-square meter parcel of land located in Lapu-Lapu City, Cebu, by virtue of a final Decision dated November 26, 1986, rendered by the RTC of Lapu-lapu City. Respondents alleged that through machinations, defendant Benjamin Lasola (Lasola) was able to register the property in his name under TCT No. 11428 and mortgage it to secure a loan from the Commercial Rural Bank of Tabogon (Cebu), Inc. (Rural Bank). In turn, the Rural Bank foreclosed the mortgage and sold the property to petitioners who registered the property under TCT No. 20006.
Petitioners, on the other hand, contended that they bought the property in 1989 from the Rural Bank. That the Certificate of Sale and the Definite Deed of Sale, including the Real Estate Mortgage between Lasola and the Rural Bank, were inscribed on Lasola's title. That the petitioners even went beyond the Rural Bank's documents and together with a Rural Bank representative, inspected the property. When confronted with the presence of houses on the property, they were led to believe by the Rural Bank's representative that the occupants were merely squatters whose occupation was being tolerated by the Rural Bank. ISSUE: WON the rural bank exercised due diligence as expected of a banking institution
HELD: The Rural Bank is a mortgagee in bad faith. Records confirm that the Rural Bank did not exercise the due diligence required of banking and financial institutions before entering into the mortgage contract withLasola. As aptly found by the RTC: [D]efendant Rural Bank was not a mortgagee in good faith because of its failure to examine more closely the title of the mortgagors despite the first-hand knowledge that other persons, and not the would-be