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    REM - PNB V Militar - Casedigest

    Uploaded by

    Joahna Goyagoy
    The document discusses a case between PNB bank and private respondents regarding a disputed property used by PNB as collateral for a loan. The Court of Appeals found that PNB failed to properly inspect the property and verify the ownership documents, and thus could not be considered a mortgagee in good faith. However, the Lucero Spouses who purchased the property from PNB are considered buyers in good faith, as they made reasonable inquiries about the occupants on the property and relied on PNB's title after foreclosure when making their purchase. The Supreme Court upholds the Court of Appeals' ruling regarding PNB, but finds the Lucero Spouses exercised proper due diligence and can be considered buyers in good faith.

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    REM - PNB V Militar - Casedigest

    Uploaded by

    Joahna Goyagoy
    120 views1 page
    The document discusses a case between PNB bank and private respondents regarding a disputed property used by PNB as collateral for a loan. The Court of Appeals found that PNB failed to properly inspect the property and verify the ownership documents, and thus could not be considered a mortgagee in good faith. However, the Lucero Spouses who purchased the property from PNB are considered buyers in good faith, as they made reasonable inquiries about the occupants on the property and relied on PNB's title after foreclosure when making their purchase. The Supreme Court upholds the Court of Appeals' ruling regarding PNB, but finds the Lucero Spouses exercised proper due diligence and can be considered buyers in good faith.

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    Credit Transactions: Real Estate Mortgage

    Original Title

    REM.pnb v Militar.casedigest

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    The document discusses a case between PNB bank and private respondents regarding a disputed property used by PNB as collateral for a loan. The Court of Appeals found that PNB failed to properly inspect the property and verify the ownership documents, and thus could not be considered a mortgagee in good faith. However, the Lucero Spouses who purchased the property from PNB are considered buyers in good faith, as they made reasonable inquiries about the occupants on the property and relied on PNB's title after foreclosure when making their purchase. The Supreme Court upholds the Court of Appeals' ruling regarding PNB, but finds the Lucero Spouses exercised proper due diligence and can be considered buyers in good faith.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    120 views1 page

    REM - PNB V Militar - Casedigest

    Uploaded by

    Joahna Goyagoy
    The document discusses a case between PNB bank and private respondents regarding a disputed property used by PNB as collateral for a loan. The Court of Appeals found that PNB failed to properly inspect the property and verify the ownership documents, and thus could not be considered a mortgagee in good faith. However, the Lucero Spouses who purchased the property from PNB are considered buyers in good faith, as they made reasonable inquiries about the occupants on the property and relied on PNB's title after foreclosure when making their purchase. The Supreme Court upholds the Court of Appeals' ruling regarding PNB, but finds the Lucero Spouses exercised proper due diligence and can be considered buyers in good faith.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    PNB v Militar

    The due diligence required of banks extends even to persons regularly engaged in the business of
    lending money secured by real estate mortgages.
    FACTS: Both petitioners PNB and the Lucero Spouses assert that they were mortgagee and buyers for
    value in good faith. Respondents argue that PNB cannot be considered a mortgagee in good faith as it
    failed to inspect the disputed property when offered to it as security for the loan, which could have led
    it to discover the forged instruments of sale. PNB, on the other hand, contended that the Lucero
    Spouses cannot be regarded as innocent purchasers for value as they failed to inquire from the
    occupants of the disputed property the status of the property.
    PNB inordinately relied on the presumption of regularity in its compliance with the requirements for the
    Extrajudicial Foreclosure of Mortgage, such as the publication of the notice of auction sale, and
    presumed compliance with the foregoing requirements was sufficient to operate as a constructive
    notice to all those claiming ownership of or a right to possess the mortgaged property, or those who
    would be adversely affected by the impending foreclosure sale.
    ISSUE: WON the due diligence required of banks extends even to persons regularly engaged in the
    business of lending money secured by real estate mortgages
    HELD: In fine, there is no showing that petitioner PNB, a banking institution, which is expected to
    exercise more care and prudence in its dealings involving registered land, ascertained the status and
    condition of the property being offered to it as a security for the loan before it approved the loan.
    Hence, we therefore find that there is no reversible error committed by the Court of Appeals in finding
    that PNB could not be considered a mortgagee in good faith.
    We now go to petitioners Lucero Spouses. The Lucero Spouses knew from the very beginning that the
    disputed property was occupied by third parties. They resided in the adjoining property. Thus, they
    went beyond the title of petitioner PNB, and upon inquiry, were made to believe that the partial
    occupation by private respondents of the disputed property was merely being tolerated by the rightful
    owner.
    Between the bank whose proof of ownership is the title acquired after years of foreclosure proceedings
    and sale, and the supposed tolerated occupation of herein respondents whose rights are dubious, and
    at best vague, petitioners Lucero Spouses cannot be faulted for considering petitioner PNB as having a
    better right over herein respondents and could very well rely on the title of the bank. After all, even
    this Court has take(n) judicial notice of the uniform practice of financing institutions to investigate,
    examine and assess the real property offered as security for any loan application. It must be
    remembered that the prudence required of the Lucero Spouses is not that of a person with training in
    law, but rather that of an average man who weighs facts and circumstances without resorting to the
    calibration of our technical rules of evidence of which his knowledge is nil. Hence, petitioners Lucero
    Spouses bought the disputed property with the honest belief that petitioner PNB was its rightful owner
    and could convey title to the property. They can therefore be considered as buyers in good faith as
    they have exercised due diligence required under the circumstances.

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