Canlas v. CA

SPS. OSMUNDO and ANGELINA CANLAS v. CA, ASIAN SAVINGS BANK, MAXIMO CONTRERAS and VICENTE MAÑOSCA / 2000 / Purisima / Petition for review on certiorari of a CA decision

Canlas and Mañosca decided to venture in business. To raise capital, Canlas executed an SPA authorizing Mañosca to mortgage 2 parcels of land. Eventually, Canlas agreed to sell these to Mañosca for 850k. Canlas delivered the TCTs, and Mañosca issued postdated checks (40k, 460k), but the check for 460k was not sufficiently funded.

            Mañosca was able to mortgage the parcels of land to an Atty. Magno with the help of impostors who misrepresented themselves as Sps. Canlas [fake couple]. Mañosca was granted a 500k loan by Asian Savings Bank [ASB] with the involvement of the fake couple. [TOWARDS THE END OF THE CASE, it was said that Canlas was with Mañosca when the latter submitted documents for the loan application. Mañosca showed Canlas several TCTs, which were collaterals for the loan, and Canlas was confident that his parcels of land were not involved. However, Mañosca used Sps. Canlas’ parcels of land as collaterals. A 200k check was released, and Canlas received it as payment of the parcels of land he sold to Mañosca.]

The loan was not paid so the mortgage was foreclosed. Canlas wrote to ASB, 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.

            Sps. Canlas instituted a case for annulment of deed of real estate mortgage [REM], with prayer for the issuance of a writ of preliminary injunction. RTC issued an order restraining the sheriff from issuing the Certificate of Sheriff’s Sale, and it annulled the REM. CA reversed RTC, holding that the REM was valid, that Sps. Canlas are not entitled to relief because of their negligence. CA said ASB exercised due diligence in granting loan application, and that it did not act with bad faith.

ASB DID NOT OBSERVE REQUIRED DILIGENCE IN VERIFYING COUPLE’S IDENTITY

• Degree of diligence required of banks 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 bank affected with public interest. Banks 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.
• Impostors did not present any ID to show their identity, yet ASB acted on their representations simply based on the residence certificates, bearing signatures that matched the affixed signatures on the REM to Atty. Magno. [According to the testimony of ASB’s AVP, the loan was already approved (basis is Mañosca’s FS), and the REM was just used as basis to check the genuineness of the signatures.] What is worse is that the REM did not bear the spouses’ tax account number, as well as Angelina Canlas’ Community Tax Certificate.

LAST CLEAR CHANCE DOCTRINE APPLICABLE; ASB MUST SUFFER RESULTING LOSS

• LONG DEFINITION. Where both parties are negligent, but the negligent act of one is appreciably later in point of time than that of the other, or where it is impossible to determine whose fault or negligence brought about the occurrence of the incident, the one who had the last clear opportunity to avoid the impending harm but failed to do so, is chargeable with the consequence arising therefrom
• SHORT DEFINITION. The antecedent negligence of a person does not preclude recovery of damages caused by the supervening negligence of the latter, who had the last fair chance to prevent the impending harm by the exercise of due diligence.
• Assuming Canlas was negligent, what was his fault? He gave Mañosca the opportunity to perpetrate the fraud by entrusting to the latter TCTs of the parcels of land (even though Mañosca did not pay yet!). HOWEVER, ASB had the last clear chance to prevent the fraud, by faithfully complying with the bank requirement of ascertaining the identity of persons transacting with them.
• Canlas’ negligence made him undeserving of an award of attorney’s fees.

PROPERTY LESSON: A CONTRACT OF MORTGAGE MUST BE CONSTITUTED ONLY BY THE PROPERTY’S ABSOLUTE OWNER, SO A MORTGAGE CONSTITUTED BY AN IMPOSTOR IS VOID