BANKING.docx

Thereon from a usurper who may have acquired a

This preview shows page 41 - 42 out of 138 pages.

thereon from a usurper who may have acquired a fraudulent certificate of title thereto. 28 chanrobleslaw In this case, it was adjudged by the courts of competent jurisdiction in a final and executory decision that the Spouses Cornista's reacquisition of the property after the lapse of the redemption period is fraudulent and the property used by the mortgagors as collateral rightfully belongs to Vila, an innocent third party with a right, could have been protected if PNB only observed the degree diligence expected from it. In Land Bank of the Philippines v. Belle Corporation , 29 the Court exhorted banks to exercise the highest degree of diligence in its dealing with properties offered as securities for the loan obligation: ChanRoblesVirtualawlibrary When the purchaser or the mortgagee is a bank, the rule on innocent purchasers or mortgagees for value is applied more strictly. Being in the business of extending loans secured by real estate mortgage, banks are presumed to be familiar with the rules on land registration. Since the banking business-is impressed with public interest, they are expected to be more cautious, to exercise a higher degree of diligence, care and prudence, than private individuals in their dealings, even those involving registered lands. Banks may not simply rely on the face of the certificate of title. Hence, they cannot assume that, xxx the title offered as security is on its face free of any encumbrances or lien, they are relieved of the responsibility of taking further steps to verify the title and inspect the properties to be mortgaged. As expected, the 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 the bank's operations. xxx. (Citations omitted) We never fail to stress the remarkable significance of a banking institution to commercial transactions, in particular, and to the country's economy in general. 30 The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of every civilized nation. 31 Whether as mere passive entities for the safekeeping and saving of money or as active instruments of business and commerce, banks have become an ubiquitous presence among the people, who have come to regard them with respect and even gratitude and, most of all, confidence. 32 Consequently, the highest degree of diligence is expected, and high standards of integrity and performance are even required, of it. 33 chanrobleslaw PNB clearly failed to observe the required degree of caution in readily approving the loan and accepting the collateral offered by the Spouses Cornista without first ascertaining the real ownership of the property. It should not have simply relied on the face of title but went furthef to physically ascertain the actual condition of the property. That the propprty offered as security was in the possession of the person other than the lone applying for the loan and the taxes were declared not in their names could have raised a suspicion. A person who
Image of page 41

Subscribe to view the full document.

Image of page 42

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern