Elainne I.

Encila 11048204

October 19, 2012 Case Digest ARMANDO V. ALANO [Deceased], Substituted by Elena Alano-Torres

v. PLANTERS DEVELOPMENT BANK, as Successor-in-Interest of MAUNLAD SAVINGS and LOAN ASSOCIATION, INC. (G.R. No. 171628) Facts: Petitioner Armando V. Alano and his brother, the late Agapito V. Alano Jr., inherited from their father a parcel of land located at Gov. Forbes St., Sampaloc, Manila. The petitioner executed a SPA authorizing his brother to sell their property in Manila. The brothers then bought a residential house located at No. 60 Encarnacion St., BF Homes, Quezon City from the proceeds of the sale of their property. The title of the property was not immediately transferred because a fire gutted the Quezon City Hall Building. Agapito V. Alano died leaving behind his wife, Lydia J. Alano and four legitimate children. Consequently, the title to the said property was reconstituted as TCT No. 18990 and registered solely in the names of Lydia and her four children. This prompted the petitioner to execute an Affidavit of Adverse Claim. Meanwhile, Lydia filed with the Register of Deeds an Affidavit of Cancellation of Adverse Claim. Thereafter, by virtue of a Deed of Absolute Sale allegedly executed by her children in her favor, TCT No. 18990 were cancelled and a new one was issued solely in her name. Later on, Slumberworld, Inc., represented by its President, Melecio A. Javier, and Treasurer, Lydia, obtained from Maunlad Savings and Loan Association, Inc. a loan of P2.3 million, secured by a Real Estate Mortgage over the subject property. The petitioner filed a Complaint against Lydia, Melecio A. Javier, Maunlad Savings and Loan Association, Inc. and the Register of Deeds of Quezon City before the RTC. Petitioner sought the cancellation of the new TCT, the issuance of a new title in his name for his one-half share of the property, and the nullification of real estate mortgage insofar as his one-half share is concerned. Lydia and Melecio A. Javier, however, failed to file their respective Answers. Thus, the RTC declared them in default. The RTC declared the petitioner the owner of the one-half of the subject property because of the implied trust between him and the heirs of his brother. At the same time, RTC sustained the validity of the estate mortgage because of the Torrens title. On appeal, the court found that Maunland Savings and Loan Association, Inc. to be a mortgagee in good faith for it took the necessary precautions to ascertain the status of the property sought to be mortgaged. Issues: Whether the Real Estate Mortgage executed by Respondent valid and binding with respect to petitioners co-owners share in the subject property. Whether Respondent Maunlad Savings and Loan Association, Inc. was a mortgagee in good faith. Held: The general rule that a mortgagee need not look beyond the title does not apply to banks and other

financial institutions as greater care and due diligence is required of them. Imbued with public interest, they "are expected to be more cautious than ordinary individuals." Failure to do so makes them mortgagees in bad faith. In this case, Maunlad Savings and Loan Association, Inc. failed to exercise due diligence in inspecting and ascertaining the status of the mortgaged property. During the ocular inspection, the credit investigator failed to ascertain the actual occupants of the property and to discover the petitioners apartment at the back portion of the property. Consequently, the real estate mortgage executed in its favor is valid only insofar as the share of the mortgagor Lydia in the subject property. We need not belabor that under Article 493 of the Civil Code; a coowner can alienate only his pro indiviso share in the co-owned property, and not the share of his co-owners.