Additional Cases

Sps. Siuco v. PNB

Gr. No. 170215 (2018)

Facts:

Spouses Suico, obtained a loan from the Philippine National Bank (PNB) secured by a real estate
mortgage on real properties in the name of the former.

petitioners were unable to pay their obligation prompting the PNB to extrajudicially foreclose the
mortgage over the subject properties before the City Sheriff of Mandaue City under EJF Case No. 92-5-
15.

The petitioners thereafter filed a Complaint against the PNB before the RTC of Mandaue City,
Declaration of Nullity of Extrajudicial Foreclosure of Mortgage.

Petitioners claimed that during the foreclosure sale of the subject properties held on 30 October 1992,
PNB, as the lone bidder, offered a bid in the amount of P8,511,000.00. By virtue of the said bid, a
Certificate of Sale of the subject properties was issued by the Mandaue City Sheriff in favor of PNB. PNB
did not pay to the Sheriff who conducted the auction sale the amount of its bid which was
P8,511,000.00 or give an accounting of how said amount was applied against petitioners' outstanding
loan, which, as of 10 March 1992, amounted only to

P1,991,770.38. Since the amount of the bid grossly exceeded the amount of petitioners' outstanding
obligation as stated in the extrajudicial foreclosure of mortgage, it was the legal duty of the winning
bidder, PNB, to deliver to the Mandaue City Sheriff the bid price or what... was left thereof after
deducting the amount of petitioners' outstanding obligation. PNB failed to deliver the amount of their
bid to the Mandaue City Sheriff or, at the very least, the amount of such bid in excess of petitioners'
outstanding obligation.

Owing to the failure of PNB as the winning bidder to deliver to the petitioners the amount of its bid or
even just the amount in excess of petitioners' obligation, the latter averred that the extrajudicial
foreclosure conducted over the subject properties by the Mandaue City Sheriff, as well as the Certificate
of Sale and the Certificate of Finality of Sale of the subject properties issued by the Mandaue City Sheriff,
in favor of PNB, were all null and void.

Issue:

Whether or not there is a defect or misrepresentation in the notice of sheriff's sale.

Ruling:

It is true that statutory provisions governing publication of notice of mortgage foreclosure sales must be
strictly complied with, and that even slight deviations therefrom will invalidate the notice and render
the sale at least voidable.

Nonetheless we must not also lose sight of the fact that the purpose of the publication of the Notice of
Sheriff's Sale is to inform all interested parties of the date, time and place of the foreclosure sale of the
real property subject thereof. Logically, this not only... requires that the correct date, time and place of
the foreclosure sale appear in the notice, but also that any and all interested parties be able to
determine that what is about to be sold at the foreclosure sale is the real property in which they have an
interest. Notices are given for the purpose of securing bidders and to prevent a sacrifice of the property.
If these objects are attained, immaterial errors and mistakes will not affect the sufficiency of the notice;

All these considered, we are of the view that the Notice of Sale in this case is valid. Petitioners failed to
convince this Court that the difference between the amount stated in the Notice of Sale and the amount
of PNB's bid resulted in discouraging or misleading bidders, depreciated the value of the property or
prevented it from commanding a fair price.

We now proceed to the effect of the non-delivery by PNB of the bid price or the surplus to the
petitioners. Given that the Statement of Account from PNB, being the only existing documentary
evidence to support its claim, shows that petitioners' loan obligations to PNB as of 30 October 1992
amounted to P6,409,814.92, and considering that the amount of PNB's bid is P8,511,000.00, there is
clearly an excess in the bid price which PNB must return, together with the interest computed in
accordance with the guidelines laid down by the court in Eastern Shipping Lines v. CA.

PNB v. CA

Gr.No. 121251 (1998)

Facts:

The Private respondent Romeo Barilea filed a complaint for damages with the RTc Negros Occidental
with a prayer for the issuance of a temporary restraining order and writ of preliminary injunction against
petitioner Philippine National Bank (PNB) and the Provincial Sheriff of Negros Occidental.

The complaint alleged that: private respondent obtained sugar crop loans with petitioner at its Victoria
Branch to finance his sugarcane plantation in Sagay, Negros Occidental; he was granted a crop loan of
P208,300.00 and, thereafter, another loan of P40,000.00 which would fall due on 31 August 1991 and 31
August 1992, respectively; the crop loans were secured by a mortgage on Barilea's parcel of land with an
area of 2,804 square meters and covered by Transfer Certificate of Title No. T-12217 of the Register of
Deeds of Cadiz City. Private respondent also alleged that on 29 September 1991, while he was
harvesting and cutting canes for the purpose of milling the same, petitioner filed a petition for the sale
of the mortgaged property under Act No. 3135 as amended with the Provincial Sheriff of Negros
Occidental, and that, consequently, on 7 October 1991 the latter issued a Notice of Extrajudicial Sale by
public auction of private respondent's property on 18 November 1991.

private respondent had partially harvested and milled his sugarcane at a sugar central after which
quedans were prepared; that when private respondent was about to withdraw the quedans, he was
informed that they were taken by petitioner. Private respondent contended that in filing the petition for
the sale of the mortgaged property with the provincial sheriff, petitioner acted with malice and bad faith
in order to embarrass him; that the petition was premature because the crop loans had not yet fallen
due; and, that because of petitioner's malicious acts in filing the petition, private respondent suffered
sleepless nights, mental torture, anxiety, public humiliation and public ridicule, thus entitling him to
moral and exemplary damages in addition to the actual expenses incurred for which petitioner should
be ordered to pay. Private respondent also prayed for the issuance of a temporary restraining order and
writ of preliminary injunction to enjoin petitioner and the Provincial Sheriff from conducting the sale by
public auction scheduled on 18 November 1991. 

Instead of filing an answer to the complaint, petitioner filed on 17 January 1991 a motion to
dismiss 2 alleging that: petitioner had not acted maliciously and prematurely in filling the petition for
foreclosure of mortgage; private respondent was granted four (4) loan accommodations by petitioner
three (3) of which had already fallen due; because of the past due accounts of private respondent
petitioner had the right to institute foreclosure proceedings; and, the other reliefs prayed for by private
respondent, i.e., issuance of a restraining order and writ of preliminary injunction, had been rendered
moot and academic by the holding of the auction sale on 7 November 1991.

On 18 February 1992 private respondent filed an amended complaint increasing the amounts prayed for
as moral damages and attorney's fees.

On 10 March 1992 the trial court issued an order dismissing the case for being moot and academic
because the sale sought to be enjoined had already been conducted on 7 November 1991. 3 The motion
for reconsideration by private respondent was denied.

respondent appealed the order of dismissal to the Court of Appeals. In its decision  of 28 June 1995, the
Court of Appeals set aside the order dismissing the case. 

Issue:

Whether the complaint for damages based on the foreclosure of mortgage should now be dismissed in
view of the foreclosure sale. The other issues raised by petitioner and whether the foreclosure sale was
valid?

Ruling:

The petition must fail. The Court of Appeals was correct in ruling that the dismissal of the complaint of
private respondent by the trial court was not valid.

In a motion to dismiss on the ground that the complaint states no cause of action, the question to be
resolved by the trial court is whether the facts alleged in the complaint are sufficient to constitute a
cause of action and not whether the allegations of fact are true as the latter are hypothetically
admitted. 5 Hence, a complaint sufficiently states a cause of action when the following questions are
answered in the affirmative: (a) Does the complaint show the plaintiff has suffered an injury? (b) Is it an
injury which the law recognizes as a wrong and for which it provides a remedy? (c) Is the defendant
liable for the alleged wrong done? and, (d) If the defendant is liable, is there a legal remedy for such
injury? 

Applying these criteria to the complaint of private respondent, the same alleged facts are sufficient to
state a cause of action for damages. The complaint alleged that private respondent suffered actual
expenses, moral anxiety and public humiliation, among others, as a result of the alleged premature and
malicious filing of the petition for foreclosure of mortgage over private respondent's property; hence,
the prayer for damages and attorney's fees.
In its motion to dismiss, petitioner's allegation that private respondent had no basis to claim for
damages amounted to failure to state a cause of action. Since the allegations in the complaint furnish
sufficient basis by which the complaint can be maintained, the same should not have been dismissed
regardless of the defense that may be raised by petitioner as defendant before the trial court. 7

In the instant case, aside from the principal action for damages, private respondent sought the issuance
of a temporary restraining order and writ of preliminary injunction to enjoin the foreclosure sale in
order to prevent an alleged irreparable injury to private respondent. It is settled that these injunctive
reliefs are preservative remedies for the protection of substantive rights and interests. Injunction is not
a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. When the act
sought to be enjoined had become  fait accompli, only the prayer for provisional remedy should be
denied. However, the trial court should still proceed with the determination of the principal action so
that an adjudication of the rights of the parties can be had.

It was grave error for the trial court to dismiss the case simply because the basis for the issuance of the
writ of injunction is no longer existent and thus moot and academic. A case becomes moot and
academic when there is no more actual controversy between the parties  or no useful purpose can be
served in passing upon the merits. The foregoing circumstance do not obtain in the instant case. The
holding of the extrajudicial sale did not in any way render the case moot and academic. As found by the
Court of Appeals, there still remained for the resolution of the trial court the issue of whether private
respondent is entitled to damages prayed for as a result of petitioner's act filing a petition to foreclose
the mortgage. Whether the filing of the petition for forclosure was proper and whether private
respondent suffered damages resulting from petitioner's acts are still unanswered questions which have
to be determined and passed upon by the trial court after hearing the evidence of both parties in
accordance with due process.

It is a rule of universal application that courts of justice are constituted to adjudicate substantive rights.
While courts should consider public policy and necessity in putting an end to litigations speedily they
must nevertheless harmonize such necessity with the fundamental right of litigants to an opportunity to
be heard. 

Cando v. Olazo

Gr. No. 160741 (2007)

Facts:

On 27 April 1987, Aurora and Claudio Olazo (respondents) mortgaged to Herminia Cando (petitioner) a
parcel of land with improvements thereon to secure the payment of their P240,000.00 loan. The real
estate mortgage was embodied in a written instrument titled "Mortgage of Realty." In the said
instrument, the parties agreed that should the mortgagors fail to pay the loan within one (1) year from
the date of the execution of the document, the mortgage shall be foreclosed.

Alleging that respondents failed to pay their obligation within the prescribed period despite demands,
petitioner filed a complaint for judicial foreclosure of mortgage before the Regional Trial Court of
Olongapo City on 16 February 1998.[2] Respondents moved for the dismissal of the complaint, arguing
that the action for foreclosure of the mortgage has already prescribed; that petitioner is barred from
filing the complaint under the principle of laches; and that respondents have already paid the mortgage
obligation.

On 25 May 1998, the trial court issued an Order which reads:

Acting on the Motion to Dismiss on the ground that the Action to Foreclose Mortgage of Realty dated
April 27, 1987 has prescribed in accordance with Article 1142 of the Civil Code "that the action for
foreclosure of mortgage prescribes after ten (10) years" and it appearing that this Complaint was filed
on February 16, 1998 after the expiration of the said period, this case is hereby DISMISSED.

Petitioner sought reconsideration of the Order but her motion was denied by the trial court, prompting
her to appeal the case before the Court of Appeals.

Issue:

Whether the court erred in dismissing the plaintiffs complaint on the ground of prescription of action?

Ruling:

The appellate court dismissed the appeal on the ground of lack of jurisdiction. It found that the issue
raised in the appeal is a pure question of law, that is, what is the proper computation of the ten (10)
year prescriptive period for filing an action for foreclosure of mortgage. According to the Court of
Appeals, the dismissal was based on Sec. 2, Rule 50 of the Rules of Civil Procedure which provides that
an appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only
questions of law shall be dismissed.[7]

In the present petition for review under Rule 45, petitioner claims that the Court of Appeals erred in
holding that her action to enforce the mortgage obligation had already prescribed. She posits that the
ten (10) year period for foreclosure of the mortgaged property must be counted from the time the
stipulated one (1) year period within which to pay the loan elapsed. Thus, it should be reckoned from 27
April 1988, and not 27 April 1987, or the date of the mortgage instrument. [8] Petitioner thus prays that
the Decision of the Court of Appeals be reconsidered and/or set aside and the case remanded to the
court of origin for further proceedings.

On the other hand, respondents point out that the petition is a mere rehash of the issues and arguments
raised and resolved by the lower court and the Court of Appeals. They insist that the ten (10) year
period for foreclosure is counted from the date of the execution of the mortgage deed. [9]

The trial court's dismissal of the complaint for judicial foreclosure of mortgage is a final order which
terminated the litigation of the case and left nothing more to be done by the lower court. Petitioner had
no more remedy but to appeal the order of dismissal.

There are two modes of appeal from a final order of the trial court in the exercise of its original
jurisdiction'(1) by writ of error under Section 2(a), Rule 41 of the Rules of Court if questions of fact or
questions of fact and law are raised or involved; or (2) appeal by certiorari under Section 2(c), Rule 41, in
relation to Rule 45, where only questions of law are raised or involved. [10] If the aggrieved party appeals
via a writ of error under Rule 41, but it turns out that only questions of law are raised, the appeal shall
be dismissed.[11]

There is a question of law in a given case when the doubt or difference arises as to what the law is on a
certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or
falsehood of alleged facts.[12]

The test of whether a question is one of law or of fact is not the appellation given to such question by
the party raising the same; rather, it is whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a
question of fact.[13]

Admittedly, petitioner's appeal entailed a lone assignment of error, which turned out be a pure question
of law. The appellate court can easily determine the plausibility of the trial court's conclusion that the
ten (10) year prescriptive period for an action for foreclosure of mortgage should be computed from the
date of the deed of mortgage without reviewing or evaluating the evidence, but of course with due
regard to the governing case law on the matter. A strict adherence to the rules leads us to the
conclusion that the Court of Appeals is correct in dismissing the appeal on the ground of lack of
jurisdiction. However, equity considerations behoove a different course of action.

Even from a cursory reading of the appeal, it is indelibly clear that the trial court committed an appalling
blunder when it ruled that an action for foreclosure of mortgage prescribes after ten (10) years from the
date of the mortgage contract. Under Article 1142 of the Civil Code, a mortgage action prescribes after
ten (10) years. Jurisprudence, however, has clarified this rule by holding that a mortgage action
prescribes after ten (10) years from the time the right of action accrued, [14] which is obviously not the
same as the date of the mortgage contract. Stated differently, an action to enforce a right arising from a
mortgage should be enforced within ten (10) years from the time the right of action accrues; otherwise,
it will be barred by prescription and the mortgage creditor will lose his rights under the mortgage. [15] The
right of action accrues when the mortgagor defaults in the payment of his obligation to the mortgagee.
[16]

The foregoing basic principles must have been unknown to the trial court when it reached its erroneous
conclusion that the action to foreclose the mortgage covered by the "Mortgage of Realty dated April 27,
1987 has prescribed in accordance with Article 1142 of the Civil Code which provides that "the action for
foreclosure of mortgage prescribes after ten (10) years' and it appearing that this Complaint was filed on
February 16, 1998 after the expiration of the said period x x x. " [17]

The dismissal of the appeal by the appellate court would have put the instant case to rest. Yet if the
Court will affirm the appellate court's dismissal of the case and disregard the error of the trial court,
great injustice and undue prejudice will be caused petitioner.

We have ruled time and again that litigants should have the amplest opportunity for a proper and just
disposition of their cause-free, as much as possible, from the constraints of procedural technicalities. In
the interest of its equity jurisdiction, the Court may disregard procedural lapses so that a case may be
resolved on its merits. Rules of procedure should promote, not defeat, substantial justice. Hence, the
Court may opt to apply the Rules liberally to resolve substantial issues raised by the parties. [18]

Rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help
secure, not override, substantial justice, and thereby defeat their very ends. Indeed, rules of procedure
are mere tools designed to expedite the resolution of cases and other matters pending in court. A strict
and rigid application of the rules that would result in technicalities that tend to frustrate rather than
promote justice must be avoided.[19]

In the instant case, the strict adherence to the rules will definitely cause injustice to petitioner since the
erroneous conclusion of the trial court will bar her from pursuing her right of action against
respondents, assuming that the latter really failed to pay their obligation within the prescribed period.

If procedural lapses on the part of the litigants are sometimes overlooked by the Court in the interest of
justice, with all the more reason will the Court overlook these rules when the injustice will be
compounded by the error of the courts below. Ultimately, the interest of substantial justice must
transcend rigid observance of the rules of procedure. We cannot allow the trial court's egregious error
to perpetuate simply because petitioner had pursued the wrong recourse or erred in drafting her
appeal.

FMCA v. Gatmayan

Gr. No. 163196 (2008)

Facts:

Respondent is the registered owner of Fontavilla No. 501 (condominium unit), Marbella I Condominium,
Roxas Boulevard, Pasay City, under Condominium Certificate of Title No. 1972 (CCT No. 1972). 4 Inscribed
on his title is a Declaration of Restrictions, to wit:

Entry No. 65370/T-20065 - DECLARATONS OF RESTRICTIONS - executed by the herein registered owner,
is hereon annotated restrictions shall be deemed to run with the land, the bldg. & other improvements
making up the project, shall constitute lien upon the project, and each unit and shall inure to the benefit
of, and be binding upon all units owners, purchasers, interchangeably or sometimes referred to in this
Master of Deed with Dec. of Restrictions as occupant, [sic] or holding any w/o [sic] or any right or
interest therein or in the project, pursuant to the prov. of the condominium act or other pertinent laws.
See restrictions and conditions imposed on Doc. No. 114, Page 24, Bk. I, s. of 1974 of the Not. Pub. for
Rizal, M. Perez, Cardenas among w/c are those dealing on scope & coverage; Management Body;
repair, alteration et [sic] assessment real property of restrictions & bldg. rules & waivers rights and
assignee, tenants occupants of unit validity,[sic] amendment of declaration dated March 19, 1974.

Date of inscription May 9, 1979 - 3:02 p.m. 5 (Emphasis supplied.)

Also inscribed is a Notice of Assessment, which states:

Entry No. 96-2466/CCT No. 1972 -NOTICE OF ASSESSMENT - Executed by MILAGROS D. CUBACUB in her
capacity as Vice-President/ Administrator of FIRST MARBELLA CONDOMINIUM ASSOCIATION, INC.
(FMCAI) [herein petitioner], stating among other things that the condominium unit, described herein has
an outstanding dues with the FMCAI in the sum of P775,786.17, inclusive of interests, penalties and
attorney's fees, which aforementioned liabilities constitute as first lien against this condominium unit
pursuant to the Master Deed of Restrictions. (Doc. No. 34; Page No. 7; Book No. III; Series of 1996 before
Notary Public Jose A. Suing, Notary Public for Quezon City).

On November 11, 2003, petitioner filed with the RTC, through the Office of the Clerk of Court & Ex-Oficio
Sheriff, a Petition7 for extrajudicial foreclosure of the condominium unit of respondent, alleging that it
(petitioner) is a duly organized association of the tenants and homeowners of Marbella I Condominium;
that respondent is a member thereof but has unpaid association dues amounting to P3,229,104.89, as of
June 30, 2003; and that the latter refused to pay his dues despite demand. The petition is docketed as
File Case No. 03-033. Attached to it are the June 30, 2003 Statement of Account 8 and July 22, 2000
demand letter9 issued to respondent.

In a letter dated November 21, 2003, the Clerk of Court, as Ex-Oficio Sheriff, recommended to the RTC
Executive Judge that the petition be dismissed for the following reasons:

Under the facts given, no mortgage exists between the petitioner and respondent. Evidently, it is not
one of those contemplated under Act 3135 as amended by Act 4118. The allegation simply does not
show a mortgagor-mortgagee relationship since respondent liability arises from his failure to pay dues,
assessments and charges due to the petitioner.

As clearly stated, the authority of the Executive Judge under Administrative Matter No. 99-10-05-0, as
amended dated March 1, 2001, covers extra-judicial foreclosure of real estate mortgages under R.A. No.
3135 and chattel mortgages under P.D. No. 1508. There is nothing in the above mentioned Circular
which authorizes the Executive Judge and/or the Ex-Officio Sheriff to extra judicially foreclose properties
covered by obligations other than the said mortgages. Hence, the subject petition is not proper for
extra-judicial foreclosure under the supervision of the Executive Judge. Dismissal of the subject petition
is recommended

Issue:

Whether or not the petitioner may extrajudicially foreclose the condominium unit of Gatmayan?

Ruling:

Petitioner must establish that it has a clear right to the extrajudicial foreclosure sale of the condominium
unit of respondent The only basis of the petitioner for causing the extrajudicial foreclosure of the
condominium unit of respondent is a notice of assessment annotated CCt 1972 in accordance with sec.
20 of RA 4726, However neither annotation nor law vests it with sufficient authority to foreclose on the
property.

The notice of assessment contains no provision for extra judicial foreclosure of condo unit. All that it
states is that the assessment of the petitioner against respondent for unpaid association dues
constitutes a first lien against the condo unit.

Sec. 20 merely prescribes the procedure by which petitioners claim may be treated as a superior lien
through the annotation thereof on the title of the condo unit.
There being no evidence of such special authority, petitioner failed to establish a clear right to a writ of
mandamus to compel the RTC to act on its petition for extra judicial foreclosure.