In the case at bar, GSIS is admittedly a financing institution.

In its answer to the complaint filed with the trial court, GSIS admitted knowledge that the spouses Jose C. Zulueta and Soledad B. Ramos owned the Antonio Subdivision when they mortgaged the same with GSIS. In Sunshine Finance and Investment Corp. v. Intermediate Appellate Court, we held that when the purchaser or mortgagee is a financing institution, the general rule that a purchaser or mortgagee of land is not required to look further than what appears on the face of the title does not apply. Further: Nevertheless, we have to deviate from the general rule because of the failure of petitioner in this case to take the necessary precautions to ascertain if there was any flaw in the title of the Nolascos and to examine the condition of the property they sought to mortgage. The petitioner is an investment and financing corporation. We presume it is experienced in its business. Ascertainment of the status and condition of properties offered to it as security for the loans it extends must be a standard and indispensable part of its operations. Surely it cannot simply rely on an examination of a Torrens certificate to determine what the subject property looks like as its condition is not apparent in the document. The land might be in a depressed area. There might be squatters on it. It might be easily inundated. It might be an interior lot without convenient access. These and other similar factors determine the value of the property and so should be of practical concern to the petitioner. (GSIS vs. dela Merced, G.R. No. 140398, 2001)

PNB vs. Sayo, Jr. [292 SCRA 202 (July 9 1998)] Warehouse Receipts Law, Warehousemans Lien Facts: Noahs Ark Sugar Refinery issued several warehouse receipts covering sugar deposited by RNS Merchandising and St. Therese Merchandising. Subsequently, these same receipts were endorsed to Ramos and Zoleta. The latter then used the receipts as security for two loan agreements with PNB, thus endorsing them with said bank. When Ramos and Zoleta could not pay their loan to the bank, PNB demanded delivery of the sugar stocks covered by the receipts from Noah Ark Sugar Refinery. Noah refused to comply with the demand alleging ownership of the sugar. It alleged that the owner of Noah, Looyuko, entered into an agreement with RNS and St. Therese Merchandising to sell the sugar indicated in the warehouse receipts stored in Noah for an amount of P63,000,000. Checks were issued but they were dishonored for being drawn against insufficient funds. Hence, PNB filed a complaint with the RTC. RTC dismissed said complaint. On appeal to the SC by way of petition for review on certiorari, SC ordered Noah and its owner, Looyuko, to deliver to PNB the sugar stocks covered by the warehouse receipts in controversy. However, Noah filed an Omnibus Motion seeking deferment of the judgment until it was heard on its warehousemans lien. RTC granted the order and evidence was received in support

thereof. RTC adjudged that there existed a valid lien in favor of Noah, and accordingly, execution of the judgment against Noah should be stayed until the full amount of Noahs lien shall have been satisfied. PNB then filed certiorari proceedings before the SC. SC held that while PNB was entitled to the sugar stocks as endorsee of the receipts, delivery to it shall only be effected upon payment of the storage fees. SC further ruled that imperative is the right of the warehouseman to demand payment of his lien because he loses his lien upon goods by surrendering possession thereof. RTC Judge Sayo, Jr. allowed a writ of execution in favor of Noah to collect on its warehousemans lien against PNB. Hence, this certiorari proceeding before the SC. Issue: (1) Whether or not PNB is liable for storage fees. (2) If yes, what is the duration of time the right of PNB over the goods may be subject to the lien? Held: (1) YES. PNB contends that it was a mere pledgee as the receipts were used to secure two loans it granted. SC agreed with this and held that the indorsement and delivery of the receipts by Ramos and Zoleta to PNB was not to convey title to or ownership of the goods but to secure the loans by way of pledge. The indorsement of the receipts to perfect the pledge merely constituted a symbolical or constructive delivery of the possession of the thing thus encumbered. The creditor, in a contract of real security, like pledge, cannot appropriate without foreclosure the things given by way of pledge. Any stipulation to the contrary is null and void for being pactum commissorio. The law requires foreclosure in order to allow a transfer of title of the goods given by way of security from its pledgor, and before any such foreclosure, the pledgor, not the pledgee, is the owner of the goods. However, SC held that the warehouseman nevertheless is entitled to his lien that attaches to the goods invokable against anyone who claims a right of possession thereon. (2) SC held that where a valid demand by the lawful holder of the receipts for the delivery of the goods is refused by the warehouseman, despite the absence of a lawful excuse provided by the law itself, the warehousemans lien is thereafter concomitantly lost. As to what the law deems a valid demand, Section 8 of the Warehouse Receipts Law enumerates what must accompany a demand. SC held that regrettably, the factual settings do not sufficiently indicate whether the demand to obtain possession of the goods complied with Sec. 8. The presumption, nevertheless, would be that the law was complied with. On the other hand, it would appear that the refusal of Noah to deliver the goods was not anchored on a valid excuse, i.e., non-satisfaction of the lien over the goods, but on an adverse claim of ownership. Under the circumstances, this hardly qualified as a valid, legal excuse. The loss of the lien, however, does not necessarily mean the extinguishment of the obligation to pay the warehousing fees and charges which continues to be a personal liability of the owners, i.e., the pledgors, not the pledgee, in this case. But even as to the owners-pledgors, the warehouseman fees and charges have ceased to accrue from the date of the rejection by Noah to heed the lawful demand by PNB for the release of the goods. Hence, the time from which the fees and charges should be made payable is from the time

Noah refused to heed PNBs demand for delivery of the sugar stocks and in no event beyond the value of the credit in favor of the pledgee since it is basic that, in foreclosures, the buyer does not assume the obligations of the pledgor to his other creditors even while such buyer acquires title over the goods less any existing preferred lien thereover.