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LIM
February 1, 2000 | Mendoza, J. | Special Problems in Sales: Sale by
a non-owner
Digester: Bea, Alexis
SUMMARY: Rodolfo Guansing mortgaged a parcel of land in order
to obtain a loan in the amount of P90k from CDB. He defaulted on
his payment thus, the land was foreclosed. CDB was the highest
bidder and he failed to redeem. Sps. Lim offered to buy the land
under the terms and conditions specified below (please read it).
Pursuant to the terms and conditions, Lim paid P30k option money.
Subsequently, she found out that the title of Rodolfo was cancelled
and the land is actually under the name of Rodolfos father. Lim is
suing for specific performance and damages. SC held that there
was a valid contract of sale despite the fact that P30k was termed
as Option Money because it was, despite its name, was earnest
money. Even if it was a valid contract of sale, the performance is
impossible because CDB cannot give what it does not own, thus
making the contract a nullity.
DOCTRINE: Ownership of the thing sold is required during the
consummation of the contract. While an exception to the rule that
morgated property is void when mortgagor is not the owner exists
(when the mortgagee is in good faith), CDB cannot possibly claim
good faith because as a banking institution, they are required to
exercise due diligence.
FACTS:
Petitioners Cavite and Development Bank (CDB) and Far East
Bank and Trust Company are banking institutions organized
under Philippine laws
On or about June 15, 1983, Rodolfo Guansing obtained a
P90,000.00 loan from CDB with which he mortgaged a parcel
of land in La Loma Quezon City which was registered to his
name as security
He defaulted in his payment of the loand so CDB foreclosed the
mortgage
At the foreclosure sale, the property was sold to CDB as the
highest bidder
o Guansing failed to redeem and thus on March 2, 1987,
CDB consolidated title to the property in its name
not have a valid title for the property since the mortgagor was
not the owner of the property foreclosed
There exists an exception to the rule that mortgaged property
is void when mortgagor is not the owner thereof: when the
mortgagee is in good faith on the principle that all persons
dealing with property covered by a TCT are not required to go
beyond what appears on the face of the title
However, contrary to their claims, CDB cannot be considered a
mortgagee in good faith because they cannot be excused from
the duty of exercising the due diligence required of respectable
banking institutions
o It is standard practice for banks, prior to the approval of
loans, to send representatives to the premises of the
land offered as security and to determine who are the
real owners thereof
o Banking institutions are expected to exercise more care
and prudence than private individuals in their dealings
because their business is affected with public interest
Spouses Lim are thus entitled to recover the P30,000.00 money
paid by them plus legal interest.
o Considering CDBs negligence, an award for moral
damages was also given