BANKING.docx

The crux of petitioners contention is that the bank

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The crux of petitioner’s contention is that the Bank failed to look beyond the transfer certificate of title of the property for which it must be held liable. We agree. Banks cannot merely rely on certificates of title in ascertaining the status of mortgaged properties; as their business is impressed with public interest, they are expected to exercise more care and prudence in their dealings than private individuals. 31 Indeed, the rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks. 32 As enunciated in Cruz vs. Bancom : 33 Respondent… is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private individuals, it is expected to exercise greater care and prudence in its dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The
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ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations. 34 Our agreement with petitioner on this point of law, notwithstanding, we are constrained to refrain from granting the prayers of her petition, to wit: that the Deed of Real Estate Mortgage be declared as non- effective and non-enforceable as far as petitioner is concerned; that she be declared as the absolute owner of the house and lot in question; that the Monesets be ordered to execute a deed of absolute sale covering the subject property; and that the Bank be ordered to direct the collection or payment of the loan of 100,000.00 plus interest from the Monesets for they were the ones who received and enjoyed the said loan. 35 The reason is that, the contract between petitioner and the Monesets being one of "Contract to Sell Lot and House," petitioner, under the circumstances, never acquired ownership over the property and her rights were limited to demand for specific performance from the Monesets, which at this juncture however is no longer feasible as the property had already been sold to other persons. A contract to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. 36 In such contract, the prospective seller expressly reserves the transfer of title to the prospective buyer, until the happening of an event, which in this case is the full payment of the purchase price. What the seller agrees or obligates himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. Stated differently, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.
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