This action might not be possible to undo. Are you sure you want to continue?
167238 FACTS: In the early 1990s, respondent spouses obtained several loans amounting to P10 million from petitioner DBP. As security for the loans, respondents mortgaged their real estate properties as well as the motor vehicles of JD Bus Lines. Due to their inability to fully pay their obligations upon maturity, respondents requested petitioner to restructure their past due loans. Petitioner agreed. Hence, respondents signed three promissory notes in 1994. Nonetheless, respondents still failed to pay the quarterly installments on the promissory notes. Thus, petitioner demanded the payment of the total value of their loans from respondents. Respondents, however, ignored petitioner and adamantly refused to pay their loans. Consequently, petitioner filed an application for extrajudicial foreclosure of real estate mortgages in the RTC of Ormoc City in 1995. To forestall the foreclosure proceedings, respondents immediately filed an action for their nullification claiming that they had already paid the principal amount of their loans (or P10 million) to petitioner. For three years, it was not acted upon by the RTC. In 1998, petitioner withdrew the application for extrajudicial foreclosure and thereafter moved for the dismissal of case filed by respondent spouses which the RTC granted. Weeks later, petitioner demanded from respondents the payment of their outstanding obligations which had by then ballooned to more than P20M. Again, respondents ignored petitioner. Petitioner filed an application for extrajudicial foreclosure of respondents’ real and chattel mortgages with the DBP special sheriff in Makati and subsequently took constructive possession of the foreclosed properties. It posted guards at the perimeter of respondents’ Cabulihan property where the foreclosed motor vehicles of JD Bus Lines were parked. Subsequently, the DBP special sheriff issued notices of sale at public auction of the foreclosed properties. Meanwhile, respondents filed a complaint for damages against petitioner and the DBP special sheriff in the RTC of Ormoc City. According to respondents, by withdrawing the application for extrajudicial foreclosure and moving for the dismissal of the case they filed, petitioner led them to believe that it would no longer seek the satisfaction of its claims. Petitioner therefore acted contrary to Article 19 of the Civil Code when it foreclosed on the real and chattel mortgages March 25, 2009
petitioner had the right to satisfy its credit by foreclosing on the mortgages. Upon default. this petition. respondents refused to pay the amortizations on the promissory notes. The 1994 promissory notes uniformly stated that failure to pay an installment (or interest) on the due date was an event of default. Because respondents’ loans were past due. by withdrawing its application for extrajudicial foreclosure and moving for the dismissal of civil case. When the principal obligation becomes due and the debtor fails to perform his obligation. Because the DBP special sheriff merely performed his ministerial duty. petitioner acted in bad faith when it foreclosed on the real and chattel mortgages anew. in its answer. as authorized by its charter. Hence. The CA affirmed the RTC decision with modification of the liability for damages. Petitioner moved for reconsideration but it was denied. Petitioner. their obligation remained outstanding. petitioner had the right to foreclose on the real and chattel mortgages securing their loans. petitioner alone was liable. pointed out that despite the restructuring. The provision allegedly constituted a pactum commissorium since it permitted petitioner to appropriate the mortgaged properties. The RTC found that. They also claimed that the provision in the mortgage contracts allowing petitioner as mortgagee to take constructive possession of the mortgaged properties upon respondents’ default was void. that is. . Since respondents neither assailed the due execution of the promissory notes nor presented proof of payment thereof. Moreover. Respondents were therefore in default when they failed to pay the quarterly amortizations on the designated due dates. petitioner led respondents to believe that their loans had been extinguished. Thus. It withdrew the application in the RTC and moved for the dismissal of civil case only for the purpose of availing of a more efficient legal remedy. the filing of civil case and the delay in its resolution prevented petitioner from collecting on the said notes from respondents. ISSUE: WO petitioner acted in bad faith when it foreclosed on respondents’ real and chattel mortgages anew. HELD: NO. by prior mutual agreement.anew. the creditor may foreclose on the mortgage for the purpose of alienating the (mortgaged) property to satisfy his credit. foreclosure through a special sheriff.
the RTC and CA erred in granting damages to them. The fact that a demand for payment was made negated bad faith on the part of petitioner. this time signed her name below the annotation. Lanuza's wife. Reyes and Navarro followed suit by filing in the Court of First Instance of Manila a petition for the consolidation of ownership of the house on the ground that the period of redemption expired on July 12. L-22331 June 6. 1961 without the vendees exercising their right of . Nothing in the said order stated.000. there was nothing on the part of petitioner even remotely showing that it led respondents to believe that it had waived its claims. vendees-petitioners-appellees. 1961. after all. MARTIN DE LEON. Manila. who did not sign the deed. the petition is hereby GRANTED. 1961 under the provisions of Act No. The real estate and chattel mortgage contracts uniformly provided that petitioner could take possession of the foreclosed properties upon the failure of respondents to pay even one amortization. Lanuza executed a document entitled "Deed of Sale with Right to Repurchase" whereby he conveyed to Maria Bautista Vda.The RTC of Ormoc City “sat” on civil case for three long years. 1962 a petition for the extra-judicial foreclosure of the mortgage. that respondents’ obligation to petitioner had in fact been extinguished. When the original period of redemption expired. G. The case is DISMISSED for lack of cause of action. De Leon filed in the sheriff's office on October 5. On January 12. the order of the RTC merely stated that the withdrawal of the application for extrajudicial foreclosure in the RTC rendered the civil case moot and academic. ET AL. 3344. vendor. vs.720 within one year. A stipulation allowing the mortgagee to take actual or constructive possession of a mortgaged property upon foreclosure is valid. respondents’ refusal to pay their obligations gave rise to petitioner’s right to take constructive possession of the foreclosed motor vehicles. Inasmuch as petitioner was in the business of lending out money it borrowed from the public. 1967 IN RE: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND THE RIGHTS TO A LOT. respondents still refused to pay. No. intervenor-appellant. RODOLFO LANUZA. MARIA BAUTISTA VDA. Despite giving respondents the opportunity to pay their long overdue obligations and avoid foreclosure. REGALA. Such procedure was. Moreover. Thus. J. As the Lanuzas failed to pay their obligation. sound banking practice called for the exercise of a more efficient legal remedy against a defaulting debtor like respondent. petitioner could not be faulted for resorting to foreclosure through a special sheriff. This mortgage was executed on October 4.R. Thus.: FACTS OF THE CASE Rodolfo Lanuza and his wife Belen were the owners of a two-story house built on a lot of the Maria Guizon Subdivision in Tondo. This inordinate delay prejudiced petitioner. Since respondents did not have a cause of action against petitioner. or even hinted. a television set and a refrigerator in consideration of the sum of P3. the more efficient method of enforcing petitioner’s rights as mortgagee under its charter. which the spouses leased from the Consolidated Asiatic Co. 1961 and recorded in the Office of the Register of Deeds of Manila on November 8. On the other hand. Thus. The decision and resolution of the CA in affirming the RTC of Ormoc City are SET ASIDE. 1961 by an annotation to this effect on the left margin of the instrument. together with the leasehold rights to the lot.. WHEREFORE. Navarro the house. DE REYES. Lanuza and his wife mortgaged the same house in favor of Martin de Leon to secure the payment of P2. de Reyes and Aurelia R. It appears that after the execution of this instrument. the parties extended it to July 12.
repurchase. The Lanuzas.. All the while.. August 9.8 following the maxim "Prior tempore potior jure" (He who is first in time is preferred in right. and the registered mortgage of De Leon. As to sale being unrecorded Held: We also agree with the lower court that between an unrecorded sale of a prior date and a recorded mortgage of a later date the former is preferred to the latter for the reason that if the original owner had parted with his ownership of the thing sold then he no longer had the ownership and free disposal of that thing so as to be able to mortgage it again. De Leon immediately took possession of the house. 2004 FACTS: . be of no moment since it is understood to be without prejudice to the better right of third parties. reserved their votes. the equitable mortgage. the gross inadequacy of the price paid.5 Indeed. C. on October 29.. as De Leon claims. concurs in the result. while valid between Reyes and Navarro. that is. JJ.R. In fact the emphasis is on the vendors payment of the amount rather than on the redemption of the things supposedly sold. Under these circumstances we cannot but conclude that the deed in question is in reality a mortgage. Registration of the mortgage under Act No.. De Leon based his claim that the pacto de retro sale is actually an equitable mortgage on the fact that. Needless to say. "Kelvinator of nine cubic feet in size.. We may add that actions for the annulment of voidable contracts can be brought only by those who are bound under it. This is clear from article 173 of the Civil Code which gives the wife ten years within which to bring an action for annulment. As such it can be ratified as Lanuza's wife in effect did in this case when she gave her conformity to the extension of the period of redemption by signing the annotation on the margin of the deed. and the Lanuzas. We refer to the nature of the so-called "Deed of Sale with Right to Repurchase" and the claim that it is in reality an equitable mortgage. As to the pacto de retro sale being in reality an equitable mortgage But there is one aspect of this case which leads us to a different conclusion. 141974. 1962 and only after De Leon had asked on October 5. The non-transmission of ownership to the vendees. as the immediate parties thereto.6 Its insertion in the contract of the parties is an avowal of an intention to mortgage rather than to sell.2 Nor would it avail the mortgagee any to assert that he is in actual possession of the property for the execution of the conveyance in a public instrument earlier was equivalent to the delivery of the thing sold to the vendee. and Zaldivar. This conclusion is of far-reaching consequence because it means not only that this action for consolidation of ownership is improper. In the discussion in the briefs of the parties as well as in the decision of the trial court. the fact has not been mentioned that for the price of P3. the supposed vendors "sold" not only their house. 1961 and yet this action was not brought until October 19. No. J." indeed. J. Concepcion.P. concur.. These are circumstances which indeed indicate an equitable mortgage. Wherefore. first. cannot prevail over the registered mortgage of De Leon. while the stipulation of facts of the parties merely referred to the object of the sale as "the property in question.)9 Under article 2125 of the Civil Code. The gross inadequacy of the price. Makalintal. which they described as new and as being made of strong materials and which alone had an assessed value of P4. Reyes. such a stipulation is a nullity. JJ. intervened in court and asked for the dismissal of the petition filed by Reyes and Navarro on the ground that the unrecorded pacto de retro sale could not affect his rights as a third party. the Lanuzas remained in possession of the properties they were supposed to have sold and they remained in possession even long after they had lost their right of redemption.These circumstances are: 1. accounts for the error in determining the true agreement of the parties to the deed. The delay in the filing of the petition for consolidation. The CFI of Manila confirmed the ownership of Reyes and Navarro in the house and the leasehold right to the lot to which Martin De Leon appealed immediately to the Supreme Court.7 3. subject only to the vendor's right of redemption.000 and. the house was sold to De Leon as the only bidder at the sheriffs sale. As to whether the sale is void ab initio We are in accord with the trial court's ruling that a conveyance of real property of the conjugal partnership made by the husband without the consent of his wife is merely voidable. 3. On October 23.J. second. when the three-month period of redemption expired the parties extended it. what is more that between the unrecorded deed of Reyes and Navarro which we hold to be an equitable mortgage. what the parties established by this stipulation is an odious pactum commissorium which enables the mortgageE to acquire ownership of the mortgaged properties without need of foreclosure proceedings. the petition for consolidation of ownership is limited to the house and the leasehold right. the supposed vendors (the Lanuzas) remained in possession of the thing sold and. 1397). It is a point which neither the parties nor the trial court appear to have sufficiently considered.L. on the one hand. Preference of mortgage credits is determined by the priority of registration of the mortgages. the petition for consolidation is dismissed. 29. cannot affect third parties.B. in such case. 2. (3) WON the pacto de retro sale is in reality an equitable mortgage and therefore cannot be the basis of a petition for consolidation of ownership. hence. 1962 for the extra-judicial for closure of his mortgage. being contrary to the provisions of article 2088 of the Civil Code. so that if there was anyone who could have questioned the sale on this ground it was Lanuza's wife alone. J. the latter must be preferred. the decision appealed from is reversed. but also their leasehold right television set and refrigerator. being unrecorded.000.000. but.4 But their relevance emerges only when they are seen in the perspective of other circumstances which indubitably show that what was intended was a mortgage and not a sale. Dizon. Costs against Reyes and Navarro. Bengzon. Sanchez and Castro. BPI FAMILY SAVINGS BANK. This stipulation is contrary to the nature of a true pacto de retro sale under which a vendee acquires ownership of the thing sold immediately upon execution of the sale. ISSUES (1) WON the sale in question is not only voidable but void ab initio for having been made by Lanuza without the consent of his wife. SPOUSES JANUARIO ANTONIO AND NATIVIDAD VELOSO G. RULING OF THE SUPREME COURT 1. on the other." The failure to highlight this point. The petition for consolidation of ownership was filed on October 19. either principally or subsidiarily (art. INC vs. 3344 would. the supposed vendors did not really transfer their ownership of the properties in question to Reyes and Navarro. secured a discharge of the mortgage on the house in favor of a rural bank by paying P2. (2) WON the sale. 2. Still another point obviously overlooked in the consideration of this case is the fact that the period of redemption expired on July 12. What was agreed was that ownership of the things supposedly sold would vest in the vendees only if the vendors failed to pay P3.000.
and to apply the proceeds to the obligation. When efforts to update the account failed. This prompted the respondents to file in the RTC of QC a complaint for annulment of foreclosure. with consignation and prayer for damages.87M which was rejected by petitioner.3M. when the principal obligation is not paid when due. The statement of intention must be accompanied by an . at the time of the foreclosure sale. In a real estate mortgage. ISSUE: WO respondent spouses comply with all the requirements for the redemption of the subject properties HELD: NO. Respondents wrote BPI offering to redeem the foreclosed properties for P1. however. registered in their names with the Registry of Deeds of Quezon City.In 1983. And in this case. executed a promissory note for P1. respondents. with improvements. SC found no reason to question it. The trial court rendered a decision declaring the validity of the extra-judicial foreclosure of the mortgaged properties of respondents but allowed the redemption of the same at a redemption price of P2. Family Bank assigned all its rights and interests in the foreclosed properties to petitioner BPI Family Bank. The fact is that.67M as the redemption price due the appellant. BPI elevated the matter to the CA which affirmed the trial court’s decision. Foreclosure is proper if the debtor is in default in the payment of his obligation. The sheriff’s certificate of sale was registered with the Registry of Deeds of Quezon City.78M. Hence. Thereafter. respondent spouses Veloso had already defaulted on their loan to petitioner’s predecessor-in-interest family bank. Inc.3M from petitioner’s predecessor-ininterest Family Bank and Trust Company. with modification declaring P2. for value received. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. (BPI). The properties were sold at public auction with Family Bank as the highest bidder for P2. the validity of the extra-judicial foreclosure was confirmed by both the RTC and CA. respondent spouses obtained a loan of P1. To secure payment of the loan.14M. Subsequently. the mortgagee has the right to foreclose on the mortgage and to have the property seized and sold. this petition. respondent spouses executed in favor of the bank a deed of mortgage over three parcels of land. Family Bank instituted extra-judicial foreclosure proceedings on the respondents’ mortgaged properties. respondents defaulted in the monthly installments due on their loan.
Consequently. in this case. and (4) interest of 1% per month on such assessments and taxes.78M paid by the highest bidder/purchaser of the properties during the auction sale. the appealed decision of the Court of Appeals is hereby REVERSED and SET ASIDE.5M. (2) interest of 1% per month on the purchase price. was ineffective since the amount offered and actually consigned did not include the interest and was also way below the P2.87M and the subsequent consignation in court of P1. is hereby dismissed. the offer by respondents to redeem the foreclosed properties for P1. the spouses Veloso. Whether or not respondents were diligent in asserting their willingness to pay is irrelevant. the judgment debtor must pay the purchaser the redemption price composed of the following: (1) the price which the purchaser paid for the property. The complaint filed by respondents. In order to effect a redemption. WHEREFORE. Redemption within the period allowed by law is not a matter of intent but a question of payment or valid tender of the full redemption price within said period. .actual and simultaneous tender of payment. while made within the period of redemption. (3) the amount of any assessments or taxes which the purchaser may have paid on the property after the purchase. This constitutes the exercise of the right to repurchase. The vendor cannot avail himself of the right to repurchase without returning to the vendee the price of the sale.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.