edilberto cruz vs. bancom
TRANSCRIPT
![Page 1: Edilberto Cruz vs. Bancom](https://reader036.vdocument.in/reader036/viewer/2022082318/552bfdd04a7959230c8b4636/html5/thumbnails/1.jpg)
OBLIGATIONS AND CONTRACTS
G.R. No. 147788Date: 19 March 2002
EDILBERTO CRUZ, ET AL. vs. BANCOM FINANCE CORPORATION (NOW UNIONBANK OF THE PHILIPPINES),Petitioner(s): Edilberto Cruz ET ALRespondent: Bancom Finance Corporation.
Facts:
In 1978, Norma Sulit offered to purchase an agricultural land owned by brothers Rev.
Fr.Edilberto Cruz and Simplicio Cruz. The asking price was P700,000, but Sulit only had
P25,000,which Fr. Cruz accepted as earnest money. Sulit failed to pay the
balance.Capitalizing on the close relationship of a Candelaria Sanchez with the brothers,
Sulit succeededin having Cruz execute a document of sale of the land in favor of Sanchez for
P150,000.Pursuant to the sale, Sulit was able to transfer the title of the land in her
name.Evidence show that aside from the P150,000, Sanchez undertook to pay the brothers
the amountof P655,000, representing the balance of the actual price of the land. Later, in a
SpecialAgreement, Sulit assumed Sanchez’s obligation to pay said amount. Unbeknownst to
the Cruz brothers, Sulit managed to obtain a loan from Bancom secured by a mortgage over
the land.Upon failure on the part of Sulit to pay the balance, the Cruz brothers filed this
complaint for reconveyance of the land.Meanwhile, Sulit defaulted in her payment to the
bank so her mortgage was foreclosed. Bancomwas declared the highest bidder and was
issued a certificate of title over the land
Mark Buñag ART 1345-1346(Essential Requisites of Contracts)02/ 21/ 2013
![Page 2: Edilberto Cruz vs. Bancom](https://reader036.vdocument.in/reader036/viewer/2022082318/552bfdd04a7959230c8b4636/html5/thumbnails/2.jpg)
OBLIGATIONS AND CONTRACTS
Issue(s):
Whether or not Bancom was a mortgagee in good faith.
Held:
NO. As a general rule, every person dealing with registered land may safely rely on the
correctness of the certificate of title and is no longer required to look behind the certificate
in order todetermine the actual owner.This rule is, however, subject to the right of a person
deprived of land through fraud to bring anaction for reconveyance, provided the rights of
innocent purchasers for value and in good faithare not prejudiced. An innocent purchaser
for value or any equivalent phrase shall be deemed,under Section 38 of the Act 496, to
include an innocent lessee, mortgagee or any other encumbrancer for value.Bancom claims
that, being an innocent mortgagee, it should not be required to conduct anexhaustive
investigation on the history of the mortgagor’s title before it could extend a loan.Bancom,
however, is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike
privateindividuals, it is expected to exercise greater care and prudence in its dealings,
including thoseinvolving registered lands. A banking institution is expected to exercise due
diligence beforeentering into a mortgage contract. The ascertainment of the status or
condition of a propertyoffered to it as security for a loan must be a standard and
indispensable part of its operations
Mark Buñag ART 1345-1346(Essential Requisites of Contracts)02/ 21/ 2013