Canlas v.

CA (2000) Petitioners: Osmundo and Angelina Canlas Respondents: CA, Asian Savings Bank, Maximo Contreras, and Vicente Manosca Ponente: Purisima, J. Doctrine: 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 on a registered or titled property. The doctrine of last clear chance is to the effect that 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 consequences arising therefrom. Short version: Osmundo entrusted his owners copy of deeds to two parcels of land to Manosca when they had an agreement of going into business together. Later on, Manosca had these lots mortgaged to get a loan from the bank. To do this, Manosca used impostors to pose as the owners of the lot. Manosca could not pay the loan so the bank had these lots foreclosed. Should the mortgage be deemed null and void? SC says yes, and that the doctrine of last clear chance is applicable because ), the bank had the last clear chance to prevent the fraud, by simply faithfully complying with the requirements for banks to ascertain the identity of the persons (asking for their IDs). Osmundo Canlas and Vicente Manosca decided to venture in business together. They needed to raise the needed capital. o Canlas executed a Special Power of Atty authorizing Manosca to mortgage 2 parcels of land in BF Homes, Paranaque. o There was a title for each land. One was named to Osmundo Canlas, the other to his wife, Angelina. Subsequently, Osmundo agreed to sell the lands to Manosca. o They agreed on a payment scheme. o The remaining balance for the price of the land would be Osmundos investment in the business. Osmundo delivered to Manosca the titles of the land (entrusting to Manosca the owner's copy of the titles of the lot). o Manosca issued two postdated checks. o Turns out, the check covering the bigger amount was not sufficiently funded. Meanwhile, (Sept 3) Manosca was able to mortgage the lands to a certain Atty. Magno, with the help of some impostors who posed as the Canlas spouses. (Sept 29) Manosca was granted a loan by the Asian Savings Bank, the lands being the security, using the 2 impostors again. o When Manosca failed to pay the loan, the bank extrajudicially foreclosed the mortgage. (Jan 15) Osmundo wrote the bank that the mortgage over the 2 lands were without the Canlas spouses authority. o Osmundo also wrote to Sheriff Contreras to have the scheduled sale cancelled. o Contreras and the bank refused. Spouses Canlas instituted the present action for annulment of deed of real estate mortgage. RTC-Makati declared mortgage nuill and void. CA reversed.

Issue: Is the doctrine of last clear chance applicable? Held: Yes. Ratio:

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 on a registered or titled property. o 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. o Because of this, the bank would be denied the protective mantle of the land registration law, accorded only t o purchasers or mortgagees for value and in good faith. The efforts exerted by the bank to verify the identity of the couple posing as the Canlas spouses fell short of the responsibility of the bank to observe more than the diligence of a good father of a family. o The previous deed of mortgage (which was used as the basis for checking the genuineness of the signatures of the supposed Canlas spouses) did not bear the tax account number of the spouses o Bank did not require the impostors to submit additional proof of their true identity (IDs) The doctrine of last clear chance is to the effect that 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 consequences arising therefrom. o The rule is that 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 that Osmundo was negligent in giving Manosca the opportunity to perpetrate the fraud (by entrusting the owner's copy of the titles of the lot), the bank had the last clear chance to prevent the fraud, by simply faithfully complying with the requirements for banks to ascertain the identity of the persons transacting with them.

For not observing the degree of diligence required of banking institutions, whose business is impressed with public interest, the bank has to bear the loss.

Decision set aside.