CANLAS VS CA & ASIAN SAVINGS BANK & VICENTE MAÑOSCA

In Aug. 1982, Osmundo S. Canlas, thru a Special Power of Atty, authorized Vicente Mañosca to mortgage two parcels of land situated in BF Homes Paranaque, each lot with a residential house existing thereon. Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente Mañosca for P850K (P500K payable within one week, and the balance of P350K to serve as his investment in a business venture. Canlas delivered to Vicente the TCT, while the latter issued 2 postdated checks. The amounts were P40,000.00 and P460,000.00, but it turned out that the check covering the bigger amount was not sufficiently funded.

Mañosca was able to mortgage the parcels of land to Atty. Magno with the help of impostors who misrepresented themselves as Spouses Canlas. Mañosca was granted a 500k loan by Asian Savings Bank through their participation. However, the loan was not paid so the mortgage was foreclosed. Canlas wrote to Asian Savings saying that the execution of the mortgage was without their authority, so steps should be taken to annul the mortgage. Canlas also wrote the sheriff to cancel the auction sale. However, the sale pushed through. Spouses Canlas instituted a case for annulment of deed of real estate mortgage, with prayer for the issuance of a writ of preliminary injunction.

RTC- restrained the sheriff from issuing the Certificate of Sheriff’s Sale, and it annulled the REM. CA reversed RTC, REM was valid

ISSUE: WON the mortgage was valid.

RULING: The mortgage is null and void. Asian Savings Bank did not observe the required diligence in verifying the couple’s identity. The degree of diligence required of banks is more than that of a good father of a family in keeping with their responsibility to exercise necessary care and prudence in dealing even on a registered or titled property.

Business of a banks is affected with public interest and they hold in trust their depositors’ money, so banks should guard against loss due to negligence or bad faith. Hence, banks would be denied the protective mantle of the land registration law, which is accorded only to purchasers or mortgagees for value and in good faith.