CAVITE DEVELOPMENT BANK AND FAR EAST BANK AND TRUST COMPANY, PETITIONERS,
VS. SPOUSES LIM
FACTS:
Rodolfo Guansing obtained a loan from Cavite Development Bank(CDB) and offered as
security his real estate property. For failing to pay his loan the property was foreclosed and title was
issued in the name of CDB.
Now here comes Lolita Chan Lim, the respondent on this case who offered to buy the property
from CDB. Mrs. Lim paid P30,000.00 as option money and was issued receipt by CDB. However ,
Mrs. Lim later discovered that the title of the property is being disputed by Perfecto Guansing, the
father of the mortgagee Rodolfo Guansing. In fact, in a separate case it was declared that Rodolfo
fraudulently secured title to the said mortgaged property and title to it was restored to Perfecto . The
decision has since become final and executory.
Aggrieved by what she considered a serious misrepresentation by CDB and its mother company
FEBTC, on their ability to sell the subject property, filed an action for specific performance and
damage against petitioners.
ISSUES:
1. Was the sale between CDB and Mrs. Lim perfected?
2. Is CDB liable for damges?
3. Is the sale valid?
HELD:
Contracts are not defined by the parties thereto but by the principles of law. In determining the
nature of a contract, the courts are not bound by the name or title given to it by the contracting
parties. In the case at bar, the sum of P30,000.00, although denominated in the offer to purchase as
“option money’ is actually in the nature of “earnest money’ or down payment when considered with
the other terms of the offer.
It is because when Mrs. Lim offered to buy the property the 10% so called “option money” forms
part of the purchase price as contemplated under Art. 1482 of the Civil Code. It is clear then that the
parties in this case actually entered into a contract of sale, partially consummated as to the payment
of the price.
CDB cannot invoke the defense that it is a mortgagee in good faith. It only applies to private
individuals and not to banking institutions. They cannot be excused from the duty of exercising the
due diligence required of banking institutions. It is standard practice for banks, before approving a
loan, to investigate who are the real owners thereof. Banking is affected with public interest that is
why they are expected to exercise more care and prudence than private individuals.
Considering CDB’s negligence it is therefore liable for damages.
As to its validity, the doctrine of “Nemo dat quod non habet” applies. One cannot give what one
does not have. The seller not being the owner the sale is void.