1) Respondents owned lots in Molino, Bacoor, Cavite but found their tax declarations and titles now belonged to Queen's Row Subdivision, Inc. (QRSI) who had mortgaged the lots, including respondents', to GSIS to secure a loan.
2) When QRSI defaulted on the loan, GSIS extrajudicially foreclosed on the mortgaged lots, including respondents'. The RTC and CA both ruled in favor of respondents and cancelled GSIS's title.
3) The issue is whether GSIS can be considered a buyer in good faith given it complied with foreclosure requirements but failed to exercise due diligence to verify ownership given the substantial loan amount
1) Respondents owned lots in Molino, Bacoor, Cavite but found their tax declarations and titles now belonged to Queen's Row Subdivision, Inc. (QRSI) who had mortgaged the lots, including respondents', to GSIS to secure a loan.
2) When QRSI defaulted on the loan, GSIS extrajudicially foreclosed on the mortgaged lots, including respondents'. The RTC and CA both ruled in favor of respondents and cancelled GSIS's title.
3) The issue is whether GSIS can be considered a buyer in good faith given it complied with foreclosure requirements but failed to exercise due diligence to verify ownership given the substantial loan amount
1) Respondents owned lots in Molino, Bacoor, Cavite but found their tax declarations and titles now belonged to Queen's Row Subdivision, Inc. (QRSI) who had mortgaged the lots, including respondents', to GSIS to secure a loan.
2) When QRSI defaulted on the loan, GSIS extrajudicially foreclosed on the mortgaged lots, including respondents'. The RTC and CA both ruled in favor of respondents and cancelled GSIS's title.
3) The issue is whether GSIS can be considered a buyer in good faith given it complied with foreclosure requirements but failed to exercise due diligence to verify ownership given the substantial loan amount
1) Respondents owned lots in Molino, Bacoor, Cavite but found their tax declarations and titles now belonged to Queen's Row Subdivision, Inc. (QRSI) who had mortgaged the lots, including respondents', to GSIS to secure a loan.
2) When QRSI defaulted on the loan, GSIS extrajudicially foreclosed on the mortgaged lots, including respondents'. The RTC and CA both ruled in favor of respondents and cancelled GSIS's title.
3) The issue is whether GSIS can be considered a buyer in good faith given it complied with foreclosure requirements but failed to exercise due diligence to verify ownership given the substantial loan amount
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PRINCE; SECURED TRANS.
NO
GSIS vs. CA, G.R. No. 128471 March 6, 1998
Petitioners vs. Respondents Salonga, Tan Kiat Tan, and Usman (respondents) were registered owners of certain lots in Molino, Bacoor, Cavite. When they were about to pay their real estate taxes, they found that the tax declaration and titles of the lot now belongs to Queen's Row Subdivision, Inc. (QRSI). Thus, before the RTC, they filed an action for declaration of ownership and cancellation of title against QRSI. The RTC impleaded GSIS and found that it entered into a project and loan agreement with QRSI wherein the GSIS granted the latter a loan in the amount of P14,360,000.00 secured by a real estate mortgage covering QRSI's lots in Molino, Bacoor, Cavite totaling an area of 1,300,000 square meters. QRSIs lots included respondents. And these lots were extrajudicially foreclosed in favour of GSIS when QRSI defaulted payment. Soon, the RTC decided against GSIS and ordered it cancellation of GSISs title over the contested lots and revive or reinstate the title belonging to the respondents. Not satisfied, GSIS appealed the RTCs decision to the CA. But the CA affirmed the RTC. ISSUE: Should GSIS be considered a mortgagee and buyer for value in good faith with a better right than herein respondents when GSIS had complied with all the requirements of a valid extrajudicial foreclosure of mortgage and when it had the right to rely on the face of the certificates of titles, thus justified in dispensing with further inquiry and acquiring the lots free from any lien, encumbrance, and defect? NO. GSIS is not a buyer in good faith because it did not exercise due diligence. PETITION DENIED. Although the GSIS is categorized as a social security and insurance entity, its ancillary function of investing funds imposes upon it the duty of exercising due diligence in dealing with properties submitted as collateral for loans. It should have been more cautious, considering the substantial amount of the loan granted. Thus, GSIS cannot assert the defense of good faith, considering that it did not exercise the proper diligence required by the situation. This failure is tantamount to negligence for GSIS cannot simply rely on the face of the title of the property, as its ancilliary function of investing funds requires a greater degree of diligence. It cannot, therefore, be considered as a mortgagee and subsequent purchaser in good faith, and necessarily, private respondents are deemed to have a better right over the property.
2 GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. HON. COURT OF APPEALS, (Thirteenth Division), JOSE SALONGA, TAN KIAT TIAN and JOSEFINA USMAN joined by her husband ESTEBAN TAN, respondents.