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The business of lending is becoming more difficult these days not only
because the regulatory authorities, the Bangko Sentral ng Pilipinas and
the Security and Exchange Commission, have been tightening the screws
lately. It is also because the courts seem to be imposing on banks a
standard of good faith more stringent than before. This was the painful
lesson learned by The Malayan Bank (formerly Republic Planters Bank) in
the case it lost to the Lagramas on April 27, 2001 ( The Malayan Bank v
Lagrama, et al. G.R. 144884 ).
When the Republic Planters Bank (now The Malayan Bank) accepted a
mortgage on land to secure the debt of a certain Demetrio Llego in 1982,
it did not seem to know of the claim of Lagrama on the land. But because
it did not make the right moves after it became aware of the cloud on
Demetrio’s ownership, its rights as buyer in the subsequent foreclosure
sale was not protected by the ruling in Saint Dominic. It’s claim of good
faith was in effect undermined by subsequent acts that, in my view,
showed tints of negligence as well as opportunism.
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Three years later,
Demetrio and his coheirs
executed an extrajudicial
partition of the estate. A
title was issued to
Demetrio for his share,
which had been
previously sold to Agustin
and Paz who had by then
fully paid. But Demetrio
did not transfer the title
to his uncle and aunt.
Instead, in 1982, through
his attorney-in-fact
Ceferino Tan, he
mortgaged the land to
Republic Planters Bank.
Demetrio failed to pay.
The property was
foreclosed with the bank
as highest bidder.
Demetrio failed to
redeem.
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it merely stepped into
Demetrio’s shoes.
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