gonzales v iac

The well-known rule in this jurisdiction is that a person dealing with a registered
land has a light to rely upon the face of the torrens certificate of title and to
dispense with the need of inquiring her except when the party concerned has actual
knowledge of facts and circumstances that would impel a reasonably cautious man
to make inquiry. 14 It has also been held that a bank is not required, before
accepting a mortgage, to make an investigation of the title of the property being
given as security. 15

Of course, banks are cautioned to exercise more care and prudence in dealing even
with registered lands, than private individuals, "for their business is one affected
with public interest, keeping in trust money belonging to their depositors, which
they should guard against loss by not committing any act of negligence which
amounts to lack of good faith by which they would be denied the protective mantle
of the land registration statute Act 496, extended only to purchasers for value and
in good faith, as well as to mortgagees of the same character and description. 16 It
is for this reason that banks before approving a loan send representatives to the
premises of the land offered as collateral and investigate who are the true owners
thereof. 17 In this regard, We believe that respondent bank had exercised the due
care demanded of it relative to the real estate loan of the Panzos for it to be
considered an innocent mortgagee for value.

gorospe v santos

ving disposed of this procedural point, We now turn to the basic legal issue-whether
or not the plaintiffs-appellees have complied with the requirements of the law
relative to the redemption of the real property in question.chanrobles virtual law
library

There is no question that Caridad J. Torrento had a perfect right to redeem said
property in view of the provisions of Section 6 of Act No. 3135, as amended by Act
No. 4148, which provides as follows:

Section 6. In all cases in which an extra-judicial sale is made under the special
power hereinbefore referred to, the debtor, his successors-in-interest or any judicial
creditor or judgment creditor of said debtor, or any person having a lien on the
property subsequent to the mortgage or deed of trust under which the property is
sold, may redeem the same at any time within the term of one year from and after
the date of the sale, and such redemption shall be governed by the provisions of
sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the
Code of Civil Procedure, in so far as these are not inconsistent with the provisions of
this Act.

The right of redemption provided for by the aforequoted provision, like any other
property right, may be transferred or assigned by its owner. 17The transferee of
such right stands in the position of a successor-in-interest of the mortgagor within
the purview of Section 29 of Rule 39 of the Rules of Court, which states:

SEC. 29. Who may redeem real property so sold. - Real property sold as provided in
the last preceding section, or any part thereof sold separately, may be redeemed in
the manner hereinafter provided by the following persons:

(a) The judgment debtor, or his successor in interest in the whole or any part of
the property;

xxx xxx xxx

This latter provision, which ordinarily refers to redemptions of real property sold on
execution of judgments, is likewise applicable to redemption of real property sold on
extra-judicial foreclosure of mortgage, by virtue of the afore-mentioned Section 6 of
Act No. 3135, as amended, which states that "such redemption shall be governed
by the provisions of sections four hundred and sixty-four to four hundred and sixty-
six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent
with the provisions of this Act." Sections 464, 465 and 466 of the Code of Civil
Procedure are now embodied in Sections 29, 30 and 31 of Rule 39 of the Rules of
Court.chanrobles virtual law library

We held in Magno v. Viola 18 that the term "successor-in-interest' includes one to

whom the debtor has transferred his statutory right of redemption; or one to whom
the debtor has conveyed his interest in the property for the purpose of redemption;
or one who succeeds to the interest of the debtor by operation of law; or one or
more joint debtors who were not owners of the property sold;. or the wife as regards
her husband's homestead by reason of the fact that some portion of her husband's
title passes to her. There is no question, therefore, that plaintiff-appellee Matilda J.
Gorospe is a "successor-in-interest" of the debtor Caridad J. Torrento and as such
could exercise the right to redeem the property at any time within the period
provided by law.chanrobles virtual law library

Appellant, nevertheless, insists that the redemption was made "at a mere fraction of
the mortgage debt, one day after the expiration of the right to redeem." Apparently,
appellant is of the view that the redemption should have been made on or before
March 10, 1961, or within one year from the date of the Sheriff's sale. Time and
again, this Court has held that in cases of redemption of registered land, the period
should be reckoned from the date the certificate of sale of the property involved
was registered, since it is only from the date of its registration that a certificate of
sale takes effect as a conveyance. 19 The purpose of the rule is to notify the
delinquent registered owners or third parties interested in the redemption that the
property had been sold, and that they have one year from the time of constructive
notice by means of registration within which to redeem the property, if they wish to
do so. 20

In the case at bar, registration of the certificate of sale in favor of the purchaser at
public auction was e only on October 20, 1960. Appellee Matilda J. Gorospe had,
therefore, a period of one year from that date within which to exercise the right of
redemption assigned to her by Caridad J. Torrento. The redemption having been
made on March 10, 1961, it is evident that the same had been timely
made.chanrobles virtual law library

Equally without merit is appellant's contention that appellees should have paid not
only the amount of the purchase price, with interest, but also the amount of the
deficiency which is the subject matter of Civil Case No. 6479. In redeeming the
property from the purchaser, the judgment debtor must pay the amount of the
purchase with one per centum per month interest thereon, up to the time of
redemption and the amount of any assessments or taxes which the purchaser may
have paid thereon after purchase, and interest on the- last named amount at the
same rate. Appellee Matilda J. Gorospe cannot be required to pay a greater amount
than that imposed upon the judgment debtor. The reason is that, this assignee of
such right, the assignee is subrogated to the position of the debtor-mortgagor and is
bound by exactly the same conditions that bound the assignor. If the mortgagor,
Caridad J. Torrento herself, has offered to redeem the property sold on foreclosure, it
would have been untenable for the purchaser at public auction to have refused to
resell to her the property on the ground that the total amount of the debt had not
been completely paid by her part from the fact that the matter of deficiency is the
subject of another case (Civil Case No. 6479), it should be noted that the portion of
Section 30 of Rule 39 invoked by appellant is not relevant to the case at bar.
Certainly, defendant-appellant cannot be considered a "purchaser who is a creditor
having a prior lien to that of the redemptioner, other than the judgment under
which such purchase was made ..." within the meaning and intendment of the Rule.
It is not applicable to defendant-appellant because she claims a lien precisely
arising from the extra-judicial foreclosure of the mortgage (which is equivalent to
the judgment in case of execution of judgment) pursuant to which she purchased
said properties. 21 Consequently, Matilda J. Gorospe, as successor-in-interest of the
debtor, was bound to pay to the appellant only the amount of the purchase price
with the corresponding interest.

Medida v ca

t is undisputed that the real estate mortgage

in favor of petitioner bank was executed byrespondent spouses during the period of
redemption. During the said period it cannot be said thatthe mortgagor is no longer
the owner of the foreclosed property since the rule up to now is the

right of a purchaser of a foreclosure sale is merely inchoate until after the period of
redemptionhas expired without the right being exercised. The title to the land sold
under mortgageforeclosure remains in the mortgagor or his grantee until the
expiration of the redemption periodand the conveyance of the master deed.The
mortgagor remains as the absolute owner of the property during the redemption
period andhas the free disposal of his property, there would be compliance with
Article. 2085 of the CivilCode for the constitution of another mortgage on the
property. To hold otherwise would createan inequitable situation wherein the
mortgagor would be deprived of the opportunity, which may be his last recourse, to
raise funds to timely redeem his property through another mortgage.

hina Banking Corporation vs. spouses Lozada, G.R. 164919, July 4, 2008

FACTS:

The spouses Lozada entered into a Contract to Sell

[
 with PPGI. PPGI, the developer of Makati Prime CityCondominium Townhomes
Project (Project), agreed to sell to the spouses Lozada Unit No. 402 of Cluster 1 of
the Project, a two-bedroom residential unit.About six months later, PPGI,
represented by its President Kenneth T. Yap and Treasurer Gilbert Y. Yap, and with
MortgageClearance, from the Housing and Land Use Regulatory Board (HLURB),
executed two Deeds of Real Estate Mortgage in favor of CBC tosecure the credit
facilities granted by CBC to PPGI in the combined maximum amount
ofP37,000,000.00. The real estate mortgagescovered 51 units of the Project,
including Unit No. 402.When PPGI failed to pay its indebtedness despite repeated
demands, CBC filed with the Clerk of Court and

Ex Officio

Sheriff of the Makati City RTC a Petition for Extrajudicial Foreclosure of the real
estate mortgages. The public auction sale took place asscheduled at which CBC was
the highest bidder for the foreclosed properties. The Certificate of Sale of the
foreclosed properties wassubsequently issued in favor of CBC.A few months prior to
the foreclosure of the real estate mortgages, PPGI sent a letter informing and
directing respondents that theproject development has been partially financed by
CBC and to remit all payments directly to CBC. There is nothing in record to
showany immediate action taken by the spouses Lozada on the letter received.CBC
notified her that it had already consolidated its title and ownership over Unit No.
402 which she presently occupied, andrequested her to vacate and surrender the
said property, including the appurtenant keys, to its duly authorized representative
within15 days from receipt of the letter.CBC filed an

Ex Parte

Petition for Issuance of a Writ of Possession

[23]

with theMakati City RTC while the spouses Lozada instituted aComplaint

[24]

with the HLURB.

RTC issued an Order

: granting the

Ex Parte

Petition of CBC, and decreeing that: Finding the petition to be duly substantiated
bythe evidence presented and pursuant to the provisions of section 7 of Act 3135 as
amended by Act 4118, let a writ of possessionissue in favor of the petitioner China
Banking Corporation. In accordance with the foregoing Order, the RTC Branch Clerk
of Courtissued the Writ of Possession

[28]

dated 3 September 2001 commanding the Sheriff to place CBC in possession of Unit
No. 402 andeject all its present occupants. The Sheriff, in turn, issued the Notices to
Vacate

[29]

dated 17 October 2001 and 22 October2001 addressed to PPGI and the

spousesLozada, respectively, directing them to vacate the said property within five
days from receiptof the notices.

CAs Decision:

ruling in favor of the spouses Lozada. According to the appellate court, the issuance
of the Writ of Possession was notmandatory and ministerial on the part of the Makati
City RTC, and the court

a quo

should have afforded the spouses Lozada ahearing, considering that (1) Unit No.
402 was no longer in the possession of the original debtor/mortgagor PPGI, but was
alreadybeing enjoyed by the spousesLozada; (2) the Makati City RTC was aware that
Unit No. 402 was already in the possession of thespouses Lozada because it was so
stated in the

ex parte

petition of CBC, as well as the Notice of Adverse Claim annotated on CCT No.69096
presented by CBC as evidence before the trial court; (3) the spouses Lozada , under
Section 18 of Presidential Decree No. 957,had the right to continue paying for Unit
No. 402 to CBC, the purchaser thereof at the foreclosure sale, still in accordance
with thetenor of the Contract to Sell; and (4) the spouses Lozada had a perfect
cause of action for the annulment of the mortgage constitutedby PPGI in favor of
CBC since PPGI failed to comply with the requirement in

Union Bank of the Philippines v. Housing and Land UseRegulatory Board ,

[36]

to notify the installment buyer of the condominium unit of the mortgage constituted
thereon.Hence, this petition.

ISSUE:

Whether the writ of possession may be granted and issued by the Makati City RTC
ex parte

or without notice to other parties.

RULING:

The Court answers in the affirmative. The procedure for extrajudicial foreclosure of
real estate mortgage is governed by Act No. 3135,[43] as amended. The purchaser
atthe public auction sale of an extrajudicially foreclosed real property may seek
possession thereof in accordance with Section 7 of ActNo. 3135, as amended, which
provides:SEC. 7. In any sale made under the provisions of this Act, the purchaser
may petition the Court of First Instance of the province orplace where the property
or any part thereof is situated, to give him possession thereof during the
redemption period, furnishingbond in an amount equivalent to the use of the
property for a period of twelve months, to indemnify the debtor in case it be
shownthat the sale was made without violating the mortgage or without complying
with the requirements of this Act.

Such petition shallbe made under oath and filed in form or an

ex parte

motion

in the registration or cadastral proceedings if the property isregistered, or in special

proceedings in the case of property registered under the Mortgage Law or under
section one hundred andninety-four of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of anyregister of
deeds in accordance with any existing law, and in each case the clerk of court shall,
upon the filing of such petition, collectthe fees specified in paragraph eleven of
section one hundred and fourteen of Act Numbered Four hundred and ninety six
asamended by Act Numbered Twenty-eight hundred and sixty-six, and the court
shall, upon approval of the bond, order that a writ of possession issue addressed to
the sheriff of the province in which the property is situated, who shall execute said
order immediately.(Emphasis supplied.) The Court expounded on the application of
the foregoing provision in

De Gracia v. San Jose

,[44] thus:As may be seen, the law expressly authorizes the purchaser to petition
for a writ of possession during the redemption period by filingan

ex parte

motion under oath for that purpose in the corresponding registration or cadastral
proceeding in the case of property with
 Torrens title; and upon the filing of such motion and the approval of the
corresponding bond, the law also in express terms directs thecourt to issue the
order for a writ of possession. Under the legal provisions above copied, the order for
a writ of possession issues as amatter of course upon the filing of the proper motion
and the approval of the corresponding bond.

No discretion is left to thecourt

. And any question regarding the regularity and validity of the sale (and the
consequent cancellation of the writ) is left to bedetermined in a subsequent
proceeding as outlined in section 8. Such question is not to be raised as a
justification for opposing theissuance of the writ of possession, since, under the Act,
the proceeding for this is

ex parte

.Strictly, Section 7 of Act No. 3135, as amended, refers to a situation wherein the
purchaser seeks possession of the foreclosedproperty during the 12-month period
for redemption. Upon the purchasers filing of the

ex parte

petition and posting of theappropriate bond, the RTC[45] shall, as a matter of

course, order the issuance of the writ of possession in the purchasers favor.

Sueno vs. LBP

G.R. No. 174711 On different occasions, Sueno obtained loans from LBP, the
total sum of which reached P2, 500, 000.00, as evidenced by the Contracts of Loan
executed by the partieson28 February 1996 and 9 October 1996. The loans were
secured by Real Estate Mortgages over two parcels of land (subject properties)
covered by Transfer Certificates of Title (TCTs) No. T-299900 and No. T-314839
registered in Suenos name and registered with the Registry of Deeds of Marikina
City. Subsequently, Sueno incurred default, which prompted LBP to cause the
extrajudicial foreclosure of the mortgage constituted on the subject properties, and
the sale of said properties at a public auction. LBP was the highest bidder in the
auction sale, as shown in the Certificate of Sale dated 6 March2000 in its favor.
Before the expiration on 6 March 2001 of the one-year period for the redemption of
the subject properties, Sueno wrote LBP a letter dated 16 February 2001 requesting
a six-month extension of her period to redeem. Upon receipt of Suenos letter, LBP
informed her that she needed to post an initial amount of P115, 000.00, so that LBP
would not consolidate the titles to the subject properties in its name. The said
amount shall be used to answer for penalties and surcharges that the Registry of
Deeds may impose as a result of the failure of LBP to consolidate the titles to the
subject properties within the required period. In partial compliance with the
aforesaid condition, Sueno issued a check on 23February 2001 in the amount of
P50, 000.00 with LBP as the payee. Upon receipt of Suenos partial payment, LBP, in
a letter dated 6 March 2001, reiterated its previous condition thatSueno must post
the full amount of P115, 000.00 for LBP to approve her request for the extension of
the redemption period. The LBP further warned Sueno that should she fail topay the
balance of P65, 000.00 by 7 March 2001, it would proceed to consolidate the
ownership of the subject properties in its name. Despite such warning, Sueno failed
to remit the balance of P65, 000.00. Thus, in a letter dated 7 March 2001, LBP
denied Suenos request for an extension of the period to redeem the
subject properties, and proceeded to consolidate ownership of the said properties in
its name. Accordingly, TCTs No. 299900 and No. 314839 in Suenosname were
cancelled and were replaced by TCTs No. 411101 and 411102, respectively, in the
name of LBP. In order to acquire physical possession of the subject properties, LBP
filed an Ex Parte Petition/Motion for the Issuance of Writ of Possession before the
RTC, docketed as LRC Case No. R-2002-551-MK. During the hearing set by the court
for the issuance of the writ, Sueno manifested her Opposition thereto on the ground
that a novation of the original obligation was already effected by her and LBP,
thereby extending the original period for the redemption of the subject
properties. Therefore, the right of LBP to consolidate the titles to the
subject properties in its name was held in abeyance pending Suenos exercise of her
right of redemption within the extended period. In a Decision dated 24 January
2003, the RTC recognized the right of LBP to the possession of the subject
properties as the registered owner thereof after having lawfully acquired the same
at the auction sale. It dismissed Suenos opposition to the pending Petition/Motion
for utter lack of merit, since she failed to establish that she and LBP indeed agreed
to extend the redemption period for the subject properties. Hence, the RTC granted
the Petition/Motion of LBP for the issuance of a Writ of Possession.

ISSUE: Is there a valid novation entered by the parties for the extension of
the redemption period.

HELD There was no valid novation. Novation is the extinguishment of an obligation

by the substitution or change of the obligation by a subsequent one which
extinguishes or modifies the first, either by changing the object or principal
conditions, or by substituting another in place of the debtor, or by subrogating a
third person in the rights of the creditor. In order for novation to take place, the
concurrence of the following requisites are indispensable: 1. There must be
a previous valid obligation; 2. There must be an agreement of the parties concerned
to a new contract; 3. There must be the extinguishment of the old contract; and
4. There must be the validity of the new contract. The elements of novation clearly
do not exist in the instant case. While it is true that there is a previous valid
obligation (i.e., the obligation of LBP to honor Suenos right to redeem the subject
property within a period of one year), such obligation expired at the same time as
the redemption period on 6 March 2001. There is, however, no clear agreement
between the parties to a new contract, again imposing upon LBP the obligation of
honoring Suenos right to redeem the subject properties within an extended
period of six months. Without a new contract, the old contract cannot be
considered extinguished. R

gonzales vs. iac

respondents. G.R. No. L-69622 January 29, 1988 Facts Lot No. 2161, the subject
property in dispute was under the ownership of Hortencia Buensuceso s parents
before it was sold in Public Auction to the Province of Iloilo due to delinquency in the
payment of the real estate taxes. Years later, Hortencia discovered that the title of
the property was still under the name of her parents which prompted her to pay the
back taxes resulting to the execution of a Deed of Repurchase through the Provincial
Treasurer followed by the purchase of the property from her parent s name to her
own as provided for in the new title. Later, the said property was mortgaged to the
Rural Bank of Pavia wherein she failed to pay the account. Consequently, a
Certificate of Sale was executed in favor of the bank. Thereafter, Matias Yusay filed
an action against the Buensuceso and the bank seeking the annulment and
cancellation of the title in the name of the Hortencia and the issuance of a new title
in favor of him as he alleged that the land was originally mortgaged to him by the
original owners way before the land was sold in public auction. He claimed that the
transaction between Buensuceso and the bank is done in bad faith. After the land
was sold, Hortencia Buensuceso is already out of the picture and the dispute is to be
settled between the bank and the petitioner. Issue 1. Whether or not the respondent
bank acted in bad faith. 2. Whether or not the title is defective due prior
engagement making the title that follows as null and void. Held 1. The answer is in
negative, the bank acted in good faith. When the certificate of title in the name of
Hortencia Buensuceso was submitted to private respondent bank for purposes of
their loan application, it was free from any lien and encumbrance. The mortgage
was duly constituted and registered with the Register of Deeds on May 28,1971. The
ejectment case which was filed by petitioner against the said spouses which
petitioner claims should have put the respondent bank on its guard was annotated
at the back of the subject title only on March 29,1973. There was therefore nothing
on the face of the title of the Hortencia Buensuceso which would arouse the
suspicion of the respondent bank. The certificate of title was in the name of the
mortgagors when the land was mortgaged by them to respondent bank. Such being
the case, said respondent bank, As mortgagee, had the right to rely on what
appeared on the certificate of title and, in the absence of anything to excite
suspicion, was under no obligation to look beyond the certificate and investigate the
title of the mortgagor appearing on the face of said certificate.