Reliance On Title Alone On Registered Lands Does Not Appy To Banks

The rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks. (Robles vs. CA, 328 SCRA 97; Rural Bank of Compostela vs. CA, 337 Phil. 521; Tomas vs. Tomas, 98 SCRA 280). The degree of diligence required of banks is more than that of a good father of a family in keeping with their responsibility to exercise the necessary care and prudence in dealing even with a registered or titled property. The business of a bank is affected with public interest, holding in trust the money of the depositors, which the bank should guard against loss due to negligence or bad faith. For this reason, the bank is not allowed to rely merely on the protective mantle of the land registration law, which is normally accorded only to purchasers or mortgagees for value and in good faith. (Canlas vs. CA, 326 SCRA 415; Rural Bank of Sta. Ignacia, Inc. vs. Dimatulac, et al., G.R. No. 142015, April 29, 2003).

Judicial notice may be taken of the common practice of banks, before approving a loan, to send a representative to the premises of the land offered as collateral and duly investigate who are the true owners thereof. Failure to do so is negligence on the part of a bank. (DBP vs. CA, 331 SCRA 267). Had the bank taken extra steps, time and effort in dealing with the property it purchased by conducting proper ocular inspection of the premises, it could have discovered early the presence of settlers therein who are land reform beneficiaries. (Rural Bank of Sta. Ignacia, Inc. vs. Dimatulac, et al., G.R. No. 142015, April 29, 2003).