G.R. No. 144029.

September 19, 2002

SPOUSES GUILLERMO AGBADA and MAXIMA AGBADA, petitioners, vs. INTER-URBAN DEVELOPERS,
INC., and REGIONAL TRIAL COURT-BR. 105, QUEZON CITY, respondents.

TOPIC: REAL ESTATE MORTGAGE

FACTS:
Petitioner-spouses obtained P1.5M loan from defendant Inter-Urban with term of 6 months and
3% monthly interest, secured by a real estate mortgage on a parcel of land and the improvements
thereon. Upon default, defendant filed complaint for foreclosure of mortgage which the petitioners
opposed claiming that the loan is not yet due because when they obtained the loan from Ong Tiam,
President of Inter-Urban, the term agreed upon is 5 years with rate at legal interest, and further
alleging that those terms appearing in the documents are simulated and for formality purposes only.
Trial court ruled in favor of defendant in which the petitioner-spouses did not appeal, thus
property was foreclosed with defendant as the highest bidder. Writ of possession was secured by
defendant. After the foreclosure, the petitioners filed Petition for Annulment of Judgment with
Preliminary Injunction which was denied by RTC and CA.

ISSUE:
Whether the foreclosure by the defendant is valid.

HELD:
Yes. The material issues in a civil action for foreclosure of real estate mortgage are the existence
of the debt and its demandability. The first one was not refuted by the petitioner-spouses. The second
lies on whether the term is 6 months or 5 years. When proceedings had been ongoing in the trial court
for more than 4 years, petitioner-spouses plainly assailed the finding of the trial court vis-a-vis the
appraised value of the foreclosed property, without more, thus strongly implying their acquiescence to
the due and demandable loan, and in fact attempted to pay the loan completely and recover the
foreclosed lot and improvements.

(Optional only)
The defense of failure of the writing to express the true intent and agreement of the parties,
obtains only where the written contract is so ambiguous or obscure in terms that the contractual
intention of the parties cannot be understood from a mere reading of the instrument, thus
necessitating the reception of relevant extrinsic evidence of the contractual provision in dispute to
enable the court to make a proper interpretation of the instrument. However, in this case, the loan and
mortgage deed is clear and without ambiguity, mistake or imperfection in specifying the maturity of the
loan exactly after 6 months from date of execution thereof at interest rate of 3% per month.

-harl- 1