GR. No. 142411 Oct.

14, 2005

WINIFRED URSAL VS COURT OF APPEALS, THE RURAL BANK OF LARENA (SIQUIJOR), INC. AND
SPOUSES JESUS MONESET AND CRISTITA MONESET

Facts: The spouses Jesus and Cristita Moneset (Monesets) are the registered owners of a 333-
square meter land together with a house thereon situated at Sitio Laguna, Basak, Cebu City
covered by Transfer Certificate of Title No. 78374. On January 9, 1985, they executed a Contract
to Sell Lot & House in favor of petitioner Winifreda Ursal (Ursal). Petitioner paid the down
payment and took possession of the property. After paying six monthly installments, petitioner
stopped paying due to the Monesets failure to deliver to her the transfer certificate of title of
the property as per their agreement; and because of the failure of the Monesets to turn over
said title, petitioner failed to have the contract of sale annotated thereon. Unknown to
petitioner, the Monesets executed on November 5, 1985 an absolute deed of sale in favor of
Dr. Rafael Canora, Jr. over the said property for P14,000.00. On September 15, 1986, the
Monesets executed another sale, this time with pacto de retro with Restituto Bundalo. On the
same day, Bundalo, as attorney-in-fact of the Monesets, executed a real estate mortgage over
said property with Rural Bank of Larena (hereafter Bank) located in Siquijor for the amount
of P100,000.00. The special power of attorney made by the Monesets in favor of Bundalo as
well as the real estate mortgage was then annotated on the title on September 16, 1986. For
the failure of the Monesets to pay the loan, the Bank served a notice of extrajudicial
foreclosure dated January 27, 1988 on Bundalo. On September 30, 1989, Ursal filed an action
for declaration of non-effectivity of mortgage and damages against the Monesets, Bundalo and
the Bank. She claimed that the defendants committed fraud and/or bad faith in mortgaging the
property she earlier bought from the Monesets with a bank located in another island, Siquijor;
and the Bank acted in bad faith since it granted the real estate mortgage in spite of its
knowledge that the property was in the possession of petitioner.

Issue: Whether the bank failed to look beyond the transfer of certificate of title of the property.

Ruling: Yes. Banks cannot merely rely on certificates of title in ascertaining the status of
mortgaged properties; as their business is impressed with public interest, they are expected to
exercise more care and prudence in their dealings than private individuals. Indeed, the rule that
persons dealing with registered lands can rely solely on the certificate of title does not apply to
banks. As enunciated in Cruz vs. Bancom: “Respondent is not an ordinary mortgagee; it is a
mortgagee-bank. As such, unlike private individuals, it is expected to exercise greater care and
prudence in its dealings, including those involving registered lands. A banking institution is
expected to exercise due diligence before entering into a mortgage contract. The ascertainment
of the status or condition of a property offered to it as security for a loan must be a standard
and indispensable part of its operations.”
G.R. No. L-32160 January 30, 1982

DOMICIANO A. AGUAS vs. CONRADO G. DE LEON and COURT OF APPEALS

Facts: This is a petition for certiorari to review the decision of the Court of Appeals.

On April 14, 1962, respondent Conrado de Leon filed in the CFI of Rizal at Quezon City a
complaint for infringement of patent against petitioner Domiciano Aguas and F.H. Aquino and
Sons alleging among others that being the original first and sole inventor of certain new and
useful improvements in the process of making mosaic pre-cast tiles, and thereafter lawfully
acquired from the Philippine Patent Office, Patent No. 658, the latter infringed the same by
making, using and selling tiles embodying said patent invention. A writ of Preliminary Injuction
was subsequently issued.

Petitioner Aguas, in his answer, denied the allegations and instead averred inter alia that
respondent De Leon is neither the original first nor sole inventor of the improvements in the
process of making mosaic pre-cast tiles, the same having been used by several tile-making
factories both here and abroad years before the alleged invention by De Leon; hence, it is not
patentable.

The trial court and the Court of Appeals, upon appeal rendered judgment in favor of
respondent de Leon. Thus, this petition.

Issue: Whether or not the alleged invention or discovery of respondent is patentable.

Ruling: It should be noted that the private respondent does not claim to be the discoverer or
inventor of the old process of tile-making. He only claims to have introduced an improvement
of said process. In fact, Letters Patent No. 658 was issued by the Philippine Patent Office to the
private respondent Conrado G. De Leon, to protect his rights as the inventor of “ an alleged new
and useful improvement in the process of making pre-cast tiles.” Indeed, section 7, Republic Act
No. 165, as amended provides: “ Any invention of a new and useful machine, manufactured
product or substance, process, or an improvement of the foregoing, shall be patentable.”