Metrobank/UCPB v.

SLGT, Dylanco, ASB Devt (GR 175181)

FACTS:
Petitioners extended a loan to ASB Devt secured by a condominium building-mortgage
Said building is yet to be completed but some of its units were already pre-sold to SLGT and Dylanco
After knowing of the mortgage, SLGT and Dylanco sought to nullify it citing that ASB failed to secure a
Mortgage Permit (required by PD 957) with the HLURB thus it was wrong to mortgage the building
The HLURB (then later the Office of the President, finally the CA) sided with SLGT and Dylanco and
ordered the nullification of the entire mortgage between Metrobank/UCPB and ASB
Metrobank/UCPB now brings the case assailing that (among others) the nullity should only extend to the
units of SLGT and Dylanco, not the entire building
ISSUE:
Whether a voided mortgage in violation of PD 957 extends to the entire mortgage
Whether Metrobank/UCPB may be considered as mortgagees in good faith to avoid nullity of the
mortgage
RULING:
YES, it is a basic postulate that a mortgage is indivisible by its nature
o Generally, a debtor who has paid a proportion of his debt cannot ask for the extinguishment of
the mortgage unless the entirety is completely satisfied
o As such, a nullity on a portion of the mortgage cannot extend to the entire mortgage
NO, banks are required to exercise greater care and prudence in dealing with registered lands
o The rule that persons dealing with property registered under Torrens system may rely on the
certificate does not apply to mortgagee-banks
Tio v. Abayata (GR 160898)
FACTS:
Abayatas successors claimed to be the absolute owners of a land by virtue of a final RTCs decision.
They alleged that through machinations, Lasola was able to register such land in his name and mortgage
it to secure a loan from Rural Bank.
In turn, the Rural Bank foreclosed the mortgage and sold the property to Tio who registered the property
under his name.
Tio and the Rural Bank claimed that they were innocent purchasers for value and in good faith.
ISSUE:
Whether the Rural Bank is a mortgagee in good faith
RULING:
NO, because of its failure to examine more closely the title of the mortgagors despite the first-hand
knowledge that other persons, and not the would-be mortgagors, were in possession of the property
o As a banking institution, it is expected to exercise due diligence before entering into a mortgage
contract.
o The ascertainment of the status or condition of a property offered to it as security for a loan must
be a standard and indispensable part of its operations
o Where the land sold is in the possession of a person other than the vendor, the purchaser must go
beyond the certificate of title and make inquiries concerning the actual possessor.